Oil settled below $40 a barrel on Friday as rising global coronavirus cases stoked fears about lackluster demand and as drawn-out vote counting in the U.S. presidential election kept markets on edge.
France reported record cases, intensifying concerns that additional lockdowns in Europe could weigh on demand.
In the U.S. election, Democratic presidential candidate Joe Biden took the lead over President Donald Trump in Georgia and Pennsylvania, edging closer to winning the White House as a handful of states continue to count votes.
Three days after polls closed, Biden has a 253 to 214 lead in the state-by-state Electoral College vote that determines the winner, according to Edison Research. Winning Pennsylvania’s 20 electoral votes would put the former vice president over the 270 he needs to win.
Brent crude settled down $1.48, or 3.62%, at $39.45 a barrel. U.S. West Texas Intermediate (WTI) dropped $1.65, or 4.25% to $37.14 a barrel.
Still, both contracts gained on the week with Brent up 5.8%, and U.S. crude rising 4.3%.
Diminishing prospects of a large U.S. stimulus package were also weighing on the market.
U.S. Senate Majority Leader Mitch McConnell said on Friday that economic statistics including a 1 percentage point drop in the U.S. unemployment rate showed that Congress should enact a smaller coronavirus stimulus package that is highly targeted at the effects of the pandemic.
“Crude oil is very sensitive to the stimulus expectations, which just took a hit for the worse,” said Bob Yawger, director of energy futures at Mizuho. “The coronavirus situation is as negative a demand indicator as you can get,” he said.
U.S. coronavirus cases surged by over 120,000 on Thursday, according to a Reuters tally, the second consecutive daily record rise as the outbreak spreads in every region.
Italy recorded its highest daily number of COVID-19 infections on Thursday. France registered a record 60,486 new confirmed cases on Friday, after posting a record 58,046 on Thursday, health ministry data showed.
Providing some support, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, could delay bringing back 2 million barrels per day of supply in January, given weaker demand after new lockdowns.
U.S. crude inventories plunged last week by 8 million barrels, against analyst expectations for an increase.
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