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Oil And Gold Dropped On Thursday Fearing Likely Pressure From Rising Covid Cases

Oil futures on Thursday, November 19, dropped 0.2% to $41.74 which is likely to be showing neutral dynamics in sessions ahead in week.

The interest over vaccination has now faded, and the focus of market investors has turned to talks in the U.S. Congress between Republicans and Democrats for a proposed economic stimulus package. The U.S. economy and, ultimately, the market for energy resources could be helped by additional public and business funding from the state. There has been little progress in the negotiating process at the moment, but this subject is likely to become one of the main issues in the near future.

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The threats to the oil market from the demand side, however, continue to be very strong. Despite restrictive measures in a number of key countries, the incidence of coronavirus infections worldwide continues to increase. In this regard, there are fears in the markets that the pandemic situation will not be brought under control until the mass delivery of the vaccine, and that oil demand will remain under pressure until that time.

Moreover the reduction of the oil production to rebalance the demand is delayed by the rise in production in Libya, which currently produces 1.25 million barrels a day. At the same time the country declared that it would not join the OPEC+ agreement to limit production until it hit a level of production of 1.7 million barrels per day. It is clear that such actions by Libya could significantly reduce the effectiveness of ongoing efforts by OPEC+ member countries to stabilize the market and will put pressure on oil prices.

In terms of statistics on the oil market, weekly data on the number of active drilling rigs in the United States from the American oilfield services company Baker Hughes will be an important indictor today. The figure increased by 10 units, to 236 units, at the end of last week.

The price of Brent crude oil continues to consolidate above the $43.5 mark, which could be a sign for the upward trend to continue. On Thursday, Brent Crude oil continuous contract after losing -0.32% settled at $44.20 per barrel.

Gold consolidated at $1,861.50 per Troy ounce after giving up 0.7 percent on Thursday.

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