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Crude oil prices settled almost 2% lower at the last trading session of the week, dropping for the second time in five days amid growing fears that global energy demand could plummet to record lows.
U.S. West Texas Intermediate futures closed lower, having shed 1.74% to trade at $41.22 per barrel. Brent, the world’s barometer for crude, also lost about 1.53% to close at $43.30.
The recent surge in COVID-19 caseloads remains a great concern for oil traders. Cases in the world’s largest economy are still rising, while India recently reported a record daily rise in COVID-19 caseloads. More than 700,000 people have died because of the COVID-19 pandemic.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, explained the geopolitical risks facing the energy market. He said:
“By the shift in lower oil prices today, it confirms that when it comes to geopolitical risk, Asia oil traders (and most for that fact) have an unfortunate predisposition to heightened US-China tensions as oil reverses lower at midday.
“The executive orders (signed by President Trump) leveled on TikTok, and the scrutiny over WeChat has opened up a most unwelcome can of worms, especially ahead of the August 15th trade meeting.”
Crude oil traders closed some of their long positions at the last trading week remembering the invisible enemy, COVID-19.