Oil drops to seven-week lows on oversupply, Covid concerns

by Jonathan Adams
Crude oil dropped

Brent shed 57 cents, or 0.72%, to $78.32 a barrel and U.S. WTI crude futures were down 39 cents, or 0.51%, at $75.55 a barrel

Crude oil dropped to seven-week lows on Monday, extending declines after the previous session’s slide, on concerns about excess supply after Japan said it was weighing releasing oil reserves and over demand from a worsening COVID-19 situation in Europe.

Brent shed 57 cents, or 0.72%, to $78.32 a barrel as of 0206 GMT and U.S. West Texas Intermediate (WTI) crude futures were down 39 cents, or 0.51%, at $75.55 a barrel.

Earlier in the session, WTI and Brent prices hit their lowest levels since Oct. 1. They slumped nearly 3% on Friday.

Japanese Prime Minister Fumio Kishida signalled on Saturday he was ready to help counter soaring oil prices following a request from the United States to release oil from its emergency stockpile.

Meanwhile, concerns are growing that renewed COVID-19 curbs could hit demand.

Germany warned on Friday it may need to move to a full lockdown after Austria said it would reimpose strict measures to tackle rising infections.

Austria imposed a lockdown earlier this month, while Germany is poised to agree on mandatory remote working, ANZ said in a note.

In Ireland and the Netherlands, people have already been instructed to work from home where possible. This comes amid the prospect of releases of oil from strategic reserves in China and the U.S., they said.

The White House on Friday pressed the OPEC producer group again to maintain adequate global supply, days after U.S. discussions with some of the world’s biggest economies over potentially releasing oil from strategic reserves to quell high energy prices.

In Japan, though, laws only allow reserves to be tapped if there are supply constraints or natural disasters.

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