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UPDATE 4-Oil drops 3% after Trump tests positive for COVID-19

Fri, 2nd Oct 2020 06:25

* Oil falls 3%, on track for weekly decline

* Concerns over U.S. stimulus package add to demand fears
(Updates prices)

By Aaron Sheldrick and Julia Payne

TOKYO/LONDON, Oct 2 (Reuters) - Oil prices were down 3% on
Friday after U.S. President Donald Trump tested positive for
COVID-19 and negotiators failed to agree a U.S. stimulus package
just as rising global oil output threatens to overwhelm a weak
price recovery.

Brent crude slipped on the Trump news and was down
$1.23, or 3%, at $39.70 a barrel by 0915 GMT. U.S. oil
was down $1.17, or 3%, at $37.55.

U.S. and Brent crude are heading for drops of around 5% and
6% respectively this week for a second consecutive week of
declines.

In a tweet, Trump said that he and First Lady Melania Trump
tested positive for COVID-19.

Oil was already in negative territory after a bipartisan
deal for more economic relief in response to the pandemic
continued to elude House Speaker Nancy Pelosi and the White
House, adding to fears about worsening demand without more
support for the economy.

"It was a weak market already and this event has come along
and added uncertainty, giving pause for people to say, 'you know
what, I’m taking some risk off the table'," said Lachlan Shaw,
head of commodity research at National Australia Bank in
Melbourne.

Crude supplies from the Organization of the Petroleum
Exporting Countries (OPEC) rose in September by 160,000 barrels
per day (bpd) from a month earlier, a Reuters survey showed.

The increase was mainly the result of increased supplies
from Libya and Iran, OPEC members that are exempt from a supply
pact between OPEC and allies led by Russia - a group known as
OPEC+.

Libya's production has risen faster than analysts expected
after the relaxation of a blockade by the Libyan National Army.
Its crude output has risen to 270,000 bpd as the country ramps
up export activity, a Libyan oil source told Reuters on
Thursday.

New COVID-19 cases worldwide have rise to more than 34
million, nearly 2 million more than at the end of last week,
based on Reuters tallies.

This week marked the grim milestone of 1 million deaths and
several countries are tightening restrictions and contemplating
lockdowns as infections accelerate, prompting concerns about the
impact on fuel demand.

"Oil's upside was always likely to be limited as fears rise
about the global consumption picture and rising OPEC+
production," said Jeffrey Halley, senior market analyst at
OANDA.

(Reporting by Aaron Sheldrick in Tokyo and Julia Payne in
London
Editing by David Goodman)

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