Oil prices slump 4% on jitters over Europe lockdowns, US elections

OPEC and their allies including Russia, a group known as OPEC+, are cutting output by about 7.7 million barrels per day in a pact aimed at supporting prices.

Oil prices slumped more than 4% on Monday to the lowest levels since May on worries a swathe of coronavirus lockdowns across Europe will weaken fuel demand, while traders braced for turbulence during the US. Presidential election week.

A labourer works amid oil containers at a wholesale fuel market in Kolkata. (Reuters File Photo)

Brent crude for January was at $36.32 a barrel, down $1.62, or 4.3%, by 0018 GMT, while US West Texas Intermediate fell $1.62, or 4.5%, to $34.17 a barrel. Brent earlier hit a low of $35.74 a barrel while WTI slipped to $33.64 a barrel.

Countries across Europe have reimposed lockdown measures aimed at slowing Covid-19 infection rates which have accelerated in the continent in the past month.

“The lockdown measures announced by UK and by Italy are just adding to the deteriorating European situation,” Michael McCarthy, chief market strategist at CMC Markets in Sydney said.

“A lot of traders are now looking at the U.S. and their rising infection rates and wondering if Europe is providing the model for what will happen in the U.S. in the coming weeks.”

Rising supplies from Libya and Iraq, members of the Organization of the Petroleum Exporting Countries (OPEC) offset production cuts by other members and caused the group’s output to rise for a fourth month in October, a Reuters survey showed.

OPEC and their allies including Russia, a group known as OPEC+, are cutting output by about 7.7 million barrels per day in a pact aimed at supporting prices.

OPEC+ is scheduled to hold a policy meeting over Nov. 30 and Dec. 1.