Oil prices dropped by nearly 2 percent early on Friday as the U.S. reported a second consecutive day of record coronavirus cases, while the counting in the presidential election continued.

As of 9:17 a.m. ET on Friday, WTI Crude was down 1.93 percent at $38.00 and Brent Crude was down 1.78 percent at $40.17.

As of 9:17 a.m. ET, Joe Biden had taken the lead in Georgia and Pennsylvania, but votes were still being counted in those two states, with Nevada and North Carolina not called either.

Oil prices rose earlier this week and on Election Day on Tuesday, supported by a rally in financial markets and a weaker U.S. dollar on Election Day.

On Wednesday, prices also jumped after the EIA reported an 8-million-barrel draw in crude oil inventories in the United States last week. This draw, a weaker U.S. dollar, and surging risk appetite after the ‘blue wave’ in the U.S. election failed to materialize, supported oil on Wednesday.

However, the spike in COVID-19 cases in the United States and in many parts of Europe stoked again fears of a renewed oil demand slump with many countries in Europe imposing fresh lockdowns or some sort of ‘soft lockdowns’ by introducing curfews and limiting the working hours of restaurants. Related: Are Vanadium Flow Batteries The Future Of Utility-Scale Energy Storage?

Oil prices fell on Thursday and continued their decline into Friday morning as the market realized that the oil demand recovery will likely be delayed due to the lockdowns in Europe, regardless of who becomes President of the United States. 

READ ALSO  Oil Stocks Are Finally Bouncing Back

In the U.S., coronavirus cases jumped to a record over 120,000 on Friday, up from Thursday’s record of 105,000 new infections.

Also weighing on oil prices was the now-nearly-dashed hope for a huge U.S. stimulus package amid the election uncertainty and a potential Democratic President with fewer Democrats in the House and a Republican Senate.

After the election jitters, the oil market is turning its attention now back to the fundamentals, looking for clues about demand and for hints from OPEC+ whether the group would tweak their production deal so as not to release another 2 million bpd on the fragile oil market in January.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

Via Oilprice.com