Oil extends losses after Trump tests positive for COVID-19

Oil prices extended losses to about three per cent on Friday after U.S. President Donald Trump said he has tested positive for COVID-19.

Agreement on a U.S. stimulus package also eluded negotiators amid ongoing worries about demand.

Brent crude slipped on the Trump news and was down $1.12 or 2.7 per cent at $39.81 a barrel by 0710 GMT.

U.S. oil was also down $1.12 or 2.9 per cent at $37.60.

U.S. and Brent crudes are heading for drops of around five per cent and six per cent respectively this week for a second consecutive week of declines.

In a tweet, Trump said that he and First Lady Melania Trump tested positive for COVID-19.

Oil was already in negative territory after a bipartisan deal for more economic relief in response to the pandemic continued to elude House Speaker, Nancy Pelosi and the White House, adding to fears about worsening demand without more support for the economy.

“It was a weak market already and this event has come along and added uncertainty, giving pause for people to say, ‘you know what, I’m taking some risk off the table’,’’ said Lachlan Shaw, Head of Commodity Research at National Australia Bank in Melbourne.

Crude supplies from the Organisation of the Petroleum Exporting Countries (OPEC) rose in September by 160,000 barrels per day (bpd) from a month earlier, a Reuters’ survey showed.

The increase was mainly the result of increased supplies from Libya and Iran, OPEC members that are exempt from a supply pact between OPEC and allies led by Russia – a group known as OPEC+.

Libya’s production has risen faster than analysts expected after the relaxation of a blockade by the Libyan National Army.

Its crude output has risen to 270,000 bpd as the country ramps up export activity, a Libyan oil source told Reuters on Thursday.

New COVID-19 cases worldwide have risen to more than 34 million, nearly two million more than at the end of last week and based on Reuters’ tallies.

This week marked the grim milestone of one million deaths and several countries are tightening restrictions and contemplating lockdowns as infections accelerate, prompting concerns about the impact on fuel demand.

“Oil’s upside was always likely to be limited as fears risen about the global consumption picture and rising OPEC+ production,’’ said Jeffrey Halley, Senior Market Analyst at OANDA.