Oil prices fell 3% on Friday after U.S. President Donald Trump tested positive for COVID-19, roiling risky assets, and as rising global crude output threatens to overwhelm the market’s weak recovery.
Benchmark Brent and U.S. crude were both headed for a second straight week of losses. The uncertainty surrounding the U.S. president’s health added to a series of jitters, including a lackluster U.S. unemployment report and increased supply from major world oil producers.
“It’s been a rough week – and now the president’s diagnosis sends a shudder through markets,” said John Kilduff, partner at Again Capital in New York. “The COVID-19 pandemic has weighed more on the oil market than any other asset class. This is a worst-case scenario for the oil market.”
Brent crude was down $1.12, or 2.7%, at $39.81 a barrel, after earlier touching a session low of $38.79 a barrel. West Texas Intermediate, the U.S. oil benchmark, settled $1.67, or 4.3%, lower at $37.05 per barrel.
U.S. and Brent crude are heading for drops of around 6% and 5% respectively this week in a second consecutive week of declines.
The U.S. labor market recovery slowed in September, as non-farm payrolls increased by 661,000 jobs last month after advancing 1.49 million in August, the U.S. Labor Department said.
Trump’s announcement that he and First Lady Melania Trump had tested positive for COVID-19 prompted sell-offs on U.S. and European stock markets.
Crude supplies from the Organization 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 rise 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 to 270,000 bpd, faster than analysts expected after the relaxation of a blockade by the Libyan National Army.
Risk markets were also down on concerns about ongoing negotiations between Congress and the White House over an additional economic stimulus package to boost economic demand.
New COVID-19 cases worldwide have rise to more than 34 million, nearly 2 million more than at the end of last week, based on Reuters tallies.
This week marked the grim milestone of 1 million deaths and several countries are tightening restrictions and contemplating lockdowns as infections accelerate, prompting concerns about the impact on fuel demand.