Oil Price Fundamental Daily Forecast – Bears Driven by Rising COVID-19 Cases, Unsettled Election

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Friday, pressured by the steady rise in coronavirus infections and as the outcome of the U.S. presidential election remains unsettled.

At 12:59 GMT, December WTI crude oil is at $37.76, down $1.03 or 02.66% and January Brent crude oil futures are trading $39.96, down $0.97 or -2.37%.

European Officials See Coronavirus Case Weighing on Demand

Helping to drive the market lower are worries about demand destruction due to the rapidly rising number of COVID-19 cases around the world. Yesterday, the European Union’s executive commission lowered its economic forecast, adding that the economy would not rebound to pre-virus levels until 2023.

Additionally, European Central Bank (ECB) Vice-President Luis de Guindos said on Friday that Euro Zone growth will likely be negative in the fourth quarter, as countries have imposed new restrictions to the economic activity over the past weeks in a bid to slow the coronavirus contagion.

On Thursday, the European Commission downgraded its GDP forecast expectations for 2020 and 2021 because of the second wave of infections.

Meanwhile, Italy recorded its highest daily number of infections on Thursday and cases surged by at least 120, 276 in the United States, the second consecutive daily record as the outbreak spreads across the country.

Traders Growing Impatient Over Election Result Delay

Democratic candidate Joseph Biden predicted victory over President Donald Trump after winning two critical U.S. states while the Republican incumbent alleged fraud with evidence, filed lawsuits and demanded recounts in a bitter contest that has yet to be decided.

Current vote counting and trends suggest the Republicans are poised to retain control of the U.S. Senate, while the Democrats will hold a slimmed majority in the House of Representatives.

Investors are betting that Democrat Joe Biden will become the next president but Republicans will retain control of the Senate, which will make it difficult for the Democrats to pass the larger fiscal spending they have been pushing.

This concern is weighing on demand for U.S. gasoline and distillates.

Daily Forecast

Despite today’s setback, crude oil losses may be limited as OPEC+ is expected to delay bringing back two million barrels per day of supply in January, given the decline in demand from new COVID-19 lockdowns. Additionally, lower U.S. Treasury yields and rising demand for risky assets are expected to continue to weigh on the U.S. Dollar, which could make dollar-denominated crude oil futures more attractive to foreign buyers.

Unfortunately, it looks as if heightened volatility will be the theme over the long-run until authorities gain control over the spread of the virus, which includes developing a successful vaccine.