Coronavirus: Oil prices slide as new lockdown measures threaten demand recovery

Oil prices continue decline as US producers ramp up production after Hurricane Delta

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The American Petroleum Institute industry group said U.S. crude, gasoline and distillate inventories all fell in the week to October 9, according to a report released after market close on Wednesday.

Still, a return to normal demand levels may be far off.

Stoking worries about fuel demand, curbs were being tightened in Britain and the Czech Republic to battle rising cases of COVID-19, while French Prime Minister Jean Castex said he could not rule out local lockdowns.

"That would effectively add 0.3% of global oil supply in a very short time frame", Commonwealth Bank commodities analyst Vivek Dhar said in a note.

"We're seeing a slow, but healthy rebalancing in the market", said Matt Sallee, portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets. He is seen as a promoter of "Shale" which might put pressure as any stimulus and benefit to the shale sector would lead to overproduction and more responsibility on OPEC+ to cut production and bring balance in the market.

Virus cases rise across Europe, S Korea
This week has seen the Netherlands close bars and restaurants and the Czech Republic and Northern Ireland close down schools. German Chancellor Angela Merkel renewed an appeal to citizens to abide by hygiene and distancing rules and avoid groups.

"I want to assure you that the OPEC, non-OPEC partnership will continue to do what it knows best, by ensuring that we don't relapse into this nearly historic plunge that we saw", Mohammad Barkindo said.

A fall in US inventories last week limited the fall in prices, however.

Brent crude futures for December were down $0.44 or 1.0% to $42.72 a barrel, while US West Texas Intermediate (WTI) futures fell by $0.40 or 1.0%, touching $40.56, Reuters reported. "There's no reason to jam barrels into an unknown situation". All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes.

If U.S. voters decide to stay the course, the current push for energy dominance through increased drilling will continue.

OPEC Secretary-General Mohammed Barkindo said: "We have to be realistic that this recovery is not picking up pace at the rate that we expected earlier in the year".

The global oil market's recovery from Covid-19 was visible from space, if you knew where to look: just two months after crude prices crashed below zero, a vast number of supertankers were sailing to China's ports - a reflection of the nation's traders snapping up barrels at rock-bottom prices.

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