Oil & Demand Outlook Down as EU Countries Re-Enter Lockdown

Oil fell on Friday morning in Asia’s energy commodities. New lockdowns came into effect in Europe to curb the rising number of COVID-19 cases. 

The move, as well the wait for the US presidential election result, dims the demand outlook. 

Brent oil futures were down 2.15% to $40.05 by 12:14 AM ET (4:14 AM GMT). It stayed above the $40 mark, however. Moreover, WTI futures slid 2.40% to $37.86.

On Thursday, Italy reported a record number of daily COVID-19 cases. Several U.S. states also recorded numbers of cases after election day.

Mizuho Securities director of energy future Bob Yawger said the situation is likely to get worse as the weather gets colder. That’s with the threat of European-style lockdowns looming on the horizon.

Many countries are re-entering lockdowns as a second COVID-19 wave hits the region. The European Union’s executive commission cut its economic forecast. It’s now predicting that the EU won’t see a rebound to pre-virus levels until 2023.

On the Election Front

Democrat Joe Biden has so far claimed 264 of the 270 electoral votes required. Pennsylvania, Georgia, Nevada, and North Carolina were still counting votes. 

Republican President Donald Trump has 214 votes and increased the chances of a contested election. He has mounted legal challenges to vote counts in Nevada, Pennsylvania, Georgia, and Michigan. He as well requested a recount in Wisconsin. 

The incumbent president also cast doubt on the election’s credibility earlier in the day.

Discouragement over a large stimulus package weighed on the black liquid. That is with a Biden presidency potentially facing a Republican Senate.

The most critical questions for oil are how quickly a COVID-19 vaccine is widely available. That’s whether a U.S. stimulus package can be achieved in a fractious and uncertain political environment. Moreover, how OPEC will respond to demand concerns, according to Axi chief global market strategist Stephen Innes.

The OPEC+ continues debating a delay in bringing back 2 million bpd of supply originally scheduled for January 2021.

Meanwhile, in precious metals, gold was down on Friday morning in Asia. Investors are still bracing for the results from the U.S. presidential election. The possibility of a contested result is still likely, although Democrat candidate Joe Biden currently holds the lead. 

By 11:44 PM ET (3:44 AM GMT), gold futures were down 0.30% at $1,941. It was staying above the $1,900 mark. On the other hand, the dollar was up on Friday.