Good news about economy, Covid, continues to be overlooked: File Image/PixaBay
Friday's news of U.S. president Donald Trump being tested positive for Covid was the latest justification for crude traders to let their fears about the virus run rampant, and their perception that this would affect everything from the White House's proposed stimulus package to economic recovery caused oil prices to tumble a further 3 percent.
John Kilduff, founding partner at Again Capital, said, "It's been a rough week, and now the president's diagnosis sends a shudder through markets.
"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."
Sameer Samana, Wells Fargo
We believe investors should continue to remain fully invested
Brent on Friday dropped $1.12, or 2.7 percent, to $39.81 per barrel, while West Texas Intermediate declined $1.04, or 2.7 percent, at $37.67 per barre; the benchmarks were headed for drops of around 6 percent and 5 percent respectively this week - a second consecutive week of declines.
Again proving that perception is everything, crude traders reacted negatively to the U.S. Labor Department's latest jobs report, which showed that 661,000 jobs were added in September and unemployment dropped from 8.4 percent to 7.9 percent - good news compared to the cataclysmic state of unemployment just a few month ago, but a disappointment to analysts who had expected a boost of 850,000 jobs.
This was also despite Sameer Samana, senior global market strategist at Wells Fargo, insisting that "These data are consistent with a labour market that is rebounding, albeit at a slower pace than a few months ago, which should be enough to support consumers and consumption.
"We believe investors should continue to remain fully invested."
Friday's gloomy sentiments were exacerbated by Libya, whose oil production rose nearly three-fold to 270,000 barrels per day (bpd) this week, far faster than experts had anticipated following the country's easing of blockades two weeks ago.
Apparently of little solace to traders was Tamas Varga, analyst at PVM Oil Associates, who pointed out that "It has to be noted that the current increase in production should be manageable for OPEC [the Organization of Petroleum Exporting Countries]."
In other potentially positive developments Friday, Russia, following China, has begun COVID vaccinations for high risk citizens while Germany's vaccine regulator said the first Covid vaccines will likely receive market authorization across Europe early next year.