New York — Crude oil prices plunged on Oct. 2 to close out a bearish week for petroleum after US President Donald Trump and his wife said they had contracted the coronavirus, and on a weaker US jobs report.
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Crude prices did rebound just a little on the news that Trump is experiencing mild, cold-like symptoms thus far, but oil prices generally followed broader downward market movements. Coronavirus cases remain on the rise in much of the world entering flu season, including Europe, and concerns are increasing that global crude oil supplies and demand could again fall more out of balance.
NYMEX November WTI fell by $1.67, down to $37.05/b, which leaves front-month WTI at its weakest settlement since Sept. 8. ICE December Brent dropped back below the $40/b threshold, dipping by $1.66 to $39.27/b.
The US economy added another 661,000 jobs in September, which fell short of expectations, and the unemployment rate dipped below 8%, according to the jobs report issued Oct. 2 by the US Labor Department. The unemployment rate fell from 8.4% in August to 7.9%. This is the last monthly jobs report issued before the Nov. 3 elections in the US.
"A disappointing non-farm payroll report was icing on the cake for weakness in oil prices today. Oil prices rose off the session lows after reports that Trump was experiencing only mild symptoms and after some Republicans said they spoke to the president and that he sounded good and upbeat," said Edward Moya, senior market analyst for OANDA.
How the president fares against the virus and how much it spread throughout the White House will continue to impact both crude prices and overall markets in the week ahead, said Stephen Innes, chief global market strategist at Axi.
"With senior White House staff operating in a very tight bubble, the next stages will be the test results for everyone on the Ohio trip," Innes said, citing Trump's participation in the first presidential debate in Cleveland and additional events and rallies in Ohio and Minnesota this week.
As for products, NYMEX November RBOB fell by 2.89 cents to settle at $1.1235/gal and November ULSD dipped by 4.00 cents to settle at $1.0850/gal.
Still, there is a lot more to weakness in commodities prices than just coronavirus cases in the White House, energy analysts said.
Outside of the US, crude oversupply concerns are picking up yet again as OPEC+ nations slowly start to raise production rates of what could be a winter wave of the coronavirus that would further depress global oil demand, Moya said.
Craig Erlam, also of OANDA, warned that OPEC+ nations may need to hold another special meeting prior to December if they want to keep crude prices from further sinking below $40/b.
"The simple fact remains that we're heading into a worrying period for COVID, and the impact on the global economy and oil demand will be significant," Erlam said of flu season. "This is something that's been building recently, and the only reason it hasn't materialized earlier is due to the warnings from the Saudi energy minister."
As such, demand outlooks remained under pressure amid rising coronavirus infections in Europe and the US.
The US manufacturing PMI for September fell to 55.4%, down 0.6 percentage point from August, the Institute for Supply Management said Oct. 1. The PMI indicates that while the economy continued to grow last month, it did so at a slowing pace.
Workplace mobility fell across Europe's five biggest economies during the last week of September, according to Google data, as surging coronavirus infections across the region continue to trigger new measures to curb the spread of the virus.