Oil selloff pauses, but outlook shaky on surging coronavirus cases, supply woes

In early Asia, Brent crude was up 12 cents, or 0.3%, at $40.58 a barrel by 0039 GMT, having dropped more than 3% overnight. U.S. oil was up 13 cents, or 03%, at $38.69 a barrel, after also declining more than 3% on Monday.

October 27, 2020 / 07:48 AM IST

Oil prices regained a semblance of stability on Tuesday after suffering sharp losses over the previous session and last week, as a resurgence of coronavirus cases globally hit prospects for crude demand while increasing supply also hurt sentiment.

The gloomy backdrop is set to keep prices under pressure over the coming day.

In early Asia, Brent crude was up 12 cents, or 0.3%, at $40.58 a barrel by 0039 GMT, having dropped more than 3% overnight. U.S. oil was up 13 cents, or 03%, at $38.69 a barrel, after also declining more than 3% on Monday.

The lack of progress in striking an agreement for a U.S. coronavirus relief package added to the general market gloom, although U.S. House of Representatives Speaker Nancy Pelosi said on Monday she was hopeful a deal with the White House can be reached before the Nov. 3 elections.

A wave of coronavirus infections sweeping across the United States, Russia, France and many other countries has undermined the global economic outlook, with record numbers of new cases possibly forcing some countries to impose fresh restrictions as winter looms.

Close

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more
Show

"The market is under pressure from a toxic brew of no stimulus, rapidly increasing coronavirus cases, and the surprise increase of oil production in Libya," Bob Yawger, director of energy futures at Mizuho Securities.

Prices got some support from the potential drop in U.S. production as oil companies began shutting offshore rigs with the approach of a hurricane in the Gulf of Mexico.

The worst is over for the crude market, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman also said on Monday.

But that contradicted an earlier remark from OPEC's secretary general, who said any oil market recovery may take longer than hoped as coronavirus infections rise around the world.

Libyan production is expected to reach 1 million barrels per day (bpd) in the coming weeks, the country's national oil company said on Friday, a quicker return than many analysts had predicted.

That is likely to complicate efforts by the Organization of the Petroleum Exporting Countries to restrict output to deal with weak demand.

OPEC+, the producer group and allies including Russia, is planning to increase production by 2 million bpd from the beginning of 2021 after record output cuts earlier this year.
Reuters
first published: Oct 27, 2020 07:44 am

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark