Covid-19 concerns limit oil prices

The threat of a second Covid-19 wave and major lock-downs keep oil prices at a low

Photo: Nick Oxford/Reuters/Ritzau Scanpix

Thursday's oil prices are at a low due to ongoing concerns with the rise in Covid-19 cases. A weakened US dollar has favored crude prices, as oil is overwhelmingly traded in the currency, and a weaker dollar makes oil cheaper when buying in other currencies.

Wednesday, prices reached their highest level since March 6 this year following an announcement from the US Energy Information Administration (EIA) informing that domestic inventories had dropped to a surprising extent.

The risk of a second Covid-19 wave and major lock-downs still looms, resulting in oil prices falling Thursday morning.

One barrel of European benchmark oil Brent costs EUR 38.22 against EUR 38.84 Wednesday afternoon. US reference crude West Texas Intermediate is traded for EUR 35.58 compared to EUR 36.53 Wednesday afternoon.

"Asia today, with a light data calendar and no headlines of note, appears to be content to range trade. Thus we are seeing both Brent and WTI flip-flopping each side of unchanged [...] with no overriding theme," Jeff Halley, senior market analyst at OANDA, tells Reuters, adding:

"I expect that state of affairs to spill over into Europe, unless the US dollar tracks lower aggressively again, in which case oil should grind higher."

US Federal Reserve employees say the rising number of corona cases is still affecting the economy in the US – the world's largest oil consumer.

On Thursday morning, a troy ounce of gold costs EUR 1,725.19 against EUR 1,725.06 Wednesday afternoon. On the industrial metal market, one ton of copper costs EUR 5,458.76 on Thursday morning relative to 5,503.08 Wednesday afternoon.

English Edit: Nielsine Nielsen

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