OPEC+ is set to reduce its current oil supply cuts of 7.7 Mbpd by 2 Mbpd in January next year. Credit: James Armbruster / Pixabay.

Oil prices have edged down due to concerns that a surge in the Covid-19 cases in Europe and the US is reducing fuel demand.

The price drop is also due to a stronger US currency.

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Brent crude futures for December were down $0.44 or 1.0% to $42.72 a barrel, while US West Texas Intermediate (WTI) futures fell by $0.40 or 1.0%, touching $40.56, Reuters reported.

Fujitomi chief analyst Kazuhiko Saito said: “Worries over weakening fuel demand in Europe due to a resurgence in Covid-19 cases and a higher US dollar against the euro weighed on investor sentiment.”

Some of the European nations are re-imposing lockdowns due to a surge in new Covid-19 cases.

Cases of Covid-19 infections have increased in and around the US Midwest with new infections and hospitalisations rising to record highs as temperatures reach lower due to cold weather.

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On 16 October, the US dollar headed towards weekly gains as surging cases of Covid-19 stalls economic recovery.

Meanwhile, Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, expressed concerns about a weaker demand outlook due to the second wave of coronavirus infections in a meeting on 16 October.

Nissan Securities research general manager Hiroyuki Kikukawa said: “All eyes are on OPEC+ move from January.”

OPEC+ is now set to reduce its current oil supply cuts of 7.7 Mbpd by 2 Mbpd in January next year.

OPEC Secretary-General Mohammed Barkindo said: “We have to be realistic that this recovery is not picking up pace at the rate that we expected earlier in the year.

“Demand itself is still looking anaemic.”