Oil prices fell on Thursday as new restrictions to stem a surge in COVID-19 infections increased uncertainty over the outlook for economic growth and a recovery in fuel demand.
Brent crude LCOc1 futures had dropped $1.39, or 3.2% to $41.93 a barrel by 1247 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 futures were down $1.41, or 3.4%, to $39.63.
Some European countries are reviving curfews and lockdowns to try to contain the rise in new coronavirus cases, with Britain expected to impose tougher COVID-19 restrictions on London from midnight on Friday.
A third of France’s population has been placed under nightly curfew to tackle climbing infections.
India, the world’s third biggest oil consumer, is on track to overtake United States with the world’s most COVID-19 infections, and is bracing for a surge of cases in coming weeks as it heads into its main holiday season.
“If demand weakens noticeably, OPEC+ will have no choice but to call off its production increase if it does not want to risk a renewed oversupply and another price slide,” Commerzbank said.
OPEC and its allies, together called OPEC+, had 102% compliance with their agreement to cut oil supply in September, two OPEC+ sources told Reuters ahead of a technical committee meeting on Thursday.
The group will ensure oil prices do not plunge steeply again when it meets to set policy at the end of November, OPEC’s Secretary General said on Thursday, adding that demand has been recovering more slowly than expected.
OPEC+ is due to taper production cuts by 2 million barrels per day (bpd), from 7.7 million bpd currently, in January.
The International Energy Agency said on Wednesday that a second wave of coronavirus infections could complicate efforts by producers to balance the market.
A fall in U.S. inventories last week limited the fall in prices, however.
The American Petroleum Institute industry group said U.S. crude, gasoline and distillate inventories all fell in the week to Oct. 9.
The U.S. Energy Information Administration is due to release its weekly data on Thursday.