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Samson: Oil is declining as Covid-19 cases rise and the vote count continues in America

6th November, 2020

US oil fell more than 2 percent on Friday, as new lockdown measures in Europe to stem the rise in Covid-19 infections fueled concerns about the outlook for demand, while markets remain in a state of tension due to the long-running US election counting

West Texas Intermediate crude fell $ 1.06, or 2.7 percent, to $ 37.73 a barrel, after dropping 0.9 percent on Thursday. Brent crude fell $ 1.05, or 2.6 percent, to $ 39.88, after falling 0.7 percent in the
previous session

Italy recorded the largest daily number of infections on Thursday, and cases rose by at least 120,276 cases in the United States, which is the second highest daily record in a row as the outbreak spreads across the country

The escalation of COVID-19 across Europe and the United States is likely to deal a blow to consumption,” said Jeffrey Haley, chief market analyst at Oanda. He added, “In the absence of concrete evidence that OPEC + is moving towards slowing or reversing the pace of production increases, the imbalance between supply / demand limits the wave of rising oil (that started) before the elections. The European Commission also lowered its economic outlook, predicting that the European Union will not see a recovery to pre-virus levels until 2023

The counting and trends of the votes in the US election shows that the Republicans will retain control of the Senate, while the Democrats are expected to obtain a slim majority in the House of Representatives, which dampens hopes for a big stimulus boot, another factor that puts pressure on oil. President Donald Trump said without providing evidence late on Thursday that he would win the election if the “legal” votes were counted, in the latest effort that casts doubt on the now-continuing tally for the third day

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, in what is known as the OPEC + group, are expected to delay the return of two million barrels per day of supplies in January, given the decline in demand due to the new isolation measures linked to Covid-19. The market received some support, as US crude oil inventories fell last week, although most of the drop was due to the halt in production as another hurricane swept across the Gulf of Mexico  LINK