Oil dips on demand concerns

Geopolitical tensions and second-wave concerns weigh on commodity

Oil prices dipped on Tuesday on concerns that the tightening of Covid-19 restrictions by governments in Europe and the US could weaken fuel demand.

On their penultimate day of the front-month, Brent crude futures for November delivery fell by more than 4 per cent to $40.6 per barrel.

West Texas Intermediate futures fell by as much as 5 per cent, in part on demand anxieties but also in the run up to the first presidential debate between Donald Trump and Joe Biden.

Geopolitical tensions are also keeping the market on edge, namely the violent engagements between Azerbaijan and Armenia over the disputed Nagorno Karabakh region.

Since the world’s biggest oil importer, China, cooled on its rampant purchasing towards the end of the Summer, there have been concerns oil’s recovery from its Spring lows was rapidly losing momentum.

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Despite OPEC’s strident commitment to support the commodity, Japan’s revelation on Tuesday of a 25 per cent year-on-year fall in imports in August, only underlines the waning demand for oil.

By late-afternoon trading, spot Brent crude stood 3.7 per cent lower at $41.38, while spot US crude had fallen by 4.4 per cent.

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