World oil prices reportedly fell on Friday morning in Asia. It comes after new lockdown rules were put in place in Europe to curb the ever-increasing number of COVID-19 cases. It is known that Europe continues to fight against pandemics.
This drop-in commodity prices certainly dimmed the outlook for demand. The wait for the outcome of the U.S. presidential election also unnerved investors. There are a lot of uncertain things that are now happening on the market. Many market participants are more cautious about it.
Based on the data, Brent crude futures fell as much as 2.15% to $40.05. Although it did not increase, it remained above the $40 figure. The WTI futures contract also fell as much as 2.40% to $37.86. This figure is rumored to still be in decline or increase.
The Massive Cases of Coronavirus
Italy reported a high number of daily COVID-19 cases on Thursday. Meanwhile, several U.S. states also recorded a larger number of positive cases after the presidential election was held a few days ago. It is certainly very worrying right now.
That’s can be worse since the weather gets colder right now. The lockdown rule in Europe is also a shadow of commodity prices in world markets. That was presented by Mizuho Securities' future energy director Bob Yawger in an interview with Reuters.
With many countries re-entering lockdown when the second COVID-19 wave hit their place, the European Union (EU) executive commission slashed its economic forecasts. They now predict that the EU will not see a rebound to levels before the virus until 2023.
U.S. Election Results Developments
In the US election, Democrats running for Joe Biden have so far claimed 264 of the 270 electoral votes needed. The situation continues with Pennsylvania, Georgia, Nevada, and North Carolina still counting votes. Despite his superiority, Biden is not yet entirely safe.
The incumbent President Donald Trump has 214 votes and increases the chances of a contested election by stepping up legal challenges. Trump did so for vote counting in Nevada, Pennsylvania, Georgia, and Michigan. In fact, he also asked for a recount in Wisconsin.
He was reportedly cast doubt on the credibility of the U.S. election the previous day. This legal move raises many pros and cons in the community. Not only in America, but even the world community is also highlighting the development of the presidential election there.
If Biden wins, then he could potentially face senate Republicans. The stimulus package is one of the things he has to take care of. If the stimulus is not agreed and given, then oil commodities will be further hampered. Other options such as gold may also be in decline.
Things That Can Affect Oil Prices
The most critical and mandatory questions to find answers to future oil developments are very diverse. An example is how quickly the COVID-19 vaccine is widely available. Then, can a U.S. stimulus deal be reached in a fragile and uncertain political environment?
In addition, how OPEC will respond to demand concerns is also one of the important things right now. This was conveyed by Axi's chief global market strategist Stephen Innes to Reuters in an interview some time ago. This opinion makes perfect sense.
The Organization of the Petroleum Exporting Countries and its allies including Russia, or OPEC+, continue to debate delays in restoring supplies of 2 million barrels per day. For information, the plan was originally scheduled to be in place for January 2021.
However, it looks like it will be withdrawn again. This condition is given the unrelenting pandemic and many other factors. Oil prices are indeed becoming less stable and more worrying is declining demand. It needs a quick, precise, but careful step.
