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UPDATE 5-Oil falls as virus cases mount and U.S. debate looms

Tue, 29th Sep 2020 05:48

* Global coronavirus deaths surpass 1 million -Reuters tally

* Top traders see tepid oil demand recovery

* Trump-Biden debate in focus

* Japan's August crude imports slump nearly 26%
(Updates prices)

By Bozorgmehr Sharafedin

LONDON, Sept 29 (Reuters) - Oil prices dropped on Tuesday as
Europe and the United States grappled with a surge in new
coronavirus infections and investors remained cautious ahead of
the first U.S. presidential debate.

Brent's November contract, which expires on
Wednesday, fell 63 cents, or 1.5%, to $41.80 a barrel by 1342
GMT. The more active Brent crude contract for December
fell 67 cents, or 1.6%, to $42.20.

U.S. West Texas Intermediate (WTI) crude fell 81
cents, or 2%, to $39.79.

More than one million people worldwide have died from
COVID-19, according to a Reuters tally, a bleak milestone in a
pandemic that has devastated the global economy and demand for
fuel.

"Rising numbers of new corona cases in the United States and
Europe are limiting the upside potential (for oil prices)," said
Commerzbank analyst Carsten Fritsch.

The heads of the world's largest trading houses predicted
tepid oil demand recovery and flat prices in the coming months
and possibly even years.

Meanwhile, all eyes were on the first U.S. presidential
election debate, at which Democrat Joe Biden and Republican
Donald Trump will square off, later on Tuesday (0100 GMT on
Wednesday).

Hopes of a new economic stimulus programme in the United
States lent some support to prices as Democratic lawmakers
unveiled a $2.2 trillion coronavirus relief bill, which House of
Representatives Speaker Nancy Pelosi said was a compromise
measure.

G20 energy ministers emphasised the importance of stimulus
packages in a joint statement on Tuesday.

Investors will also look for signs of growth in U.S. demand
from American Petroleum Institute data on Tuesday and from the
Energy Information Administration on Wednesday.

The average U.S. crude oil inventory estimate from five
analysts polled by Reuters was that U.S. stocks rose by 1.4
million barrels in the week to Sept. 25. They expect gasoline
stockpiles to have fallen by 1.6 million barrels and distillate
inventories, which include diesel and jet fuel, to have declined
by 800,000 barrels.

Clashes between Armenia and Azerbaijan over the
Nagorno-Karabakh region have also kept markets on edge. If the
conflict escalates, it could affect oil and gas exports from
Azerbaijan.

"Disruptions to output and exports do not seem imminent.
Nevertheless, the conflict has raised the geopolitical risk
temperature," said oil broker PVM's Tamas Varga.

In a clear sign of weak demand in Japan, the world's
fourth-biggest crude buyer, official data showed the country's
August oil imports fell more than 25% from a year earlier.

(Reporting by Bozorgmehr Sharafedin in London
Additional reporting by Sonali Paul in Melbourne and Koustav
Samanta in Singapore
Editing by Susan Fenton and David Goodman
)

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