Oil slumps on prospects of emergency supply releases, Europe COVID-19 surge

MELBOURNE (Reuters) – U.S. crude prices dropped in early trade on Monday extending big losses on Friday, after Japan said on the weekend it was considering releasing oil reserves to help dampen prices.

At the same time, demand concerns are growing as COVID-19 cases surge in Europe.

U.S. West Texas Intermediate (WTI) crude futures were down 65 cents, or 0.9%, at $75.25 a barrel at 2327 GMT, after sliding as low as $74.76, the weakest since Oct 1.

WTI and Brent prices slumped around 3% on Friday.

Japanese Prime Minsiter Fumio Kishida on Saturday signalled he was ready to help counter soaring oil prices following a request from the United States to release oil from its emergeny stockpile.

However, Japanese laws only allow reserves to be tapped if there are supply constraints or natural disasters.

“We’re proceeding with consideration as to what we can do legally on the premise that Japan will coordinate with the United States and other countries concerned,” Kishida told reporters.

On the demand side, concerns are growing that renewed COVID-19 curbs could hit demand growth. Germany warned on Friday it may need to move to a full lockdown after Austria said it would reimpose strict measures to tackle rising infections.

(Reporting by Sonali Paul; Editing by Sam Holmes)