U.S. West Texas Intermediate 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. Nonetheless, the market is expected to finish the week higher after reversing weakness.
Near-term losses could be limited by expectations for a weaker U.S. Dollar and the possibility that OPEC and its allies could take action to stabilize or increase their current production cuts.
Heightened Demand Worries in Europe
Helping to drive the market lower are worries about demand destruction due to the rapidly rising number of COVID-19 cases around the world. On Thursday, 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.
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.