Oil prices fall over 2% as coronavirus cases mount

Oil prices fell over 2% to their lowest in a week on Tuesday on worries about the outlook for fuel demand as Europe and the United States grappled with a surge in new coronavirus infections.

An industry report in the afternoon from the American Petroleum Institute (API) is expected to show U.S. crude stockpiles increased 1.4 MM barrels last week.

On its second to last day as the front-month, Brent futures for November delivery fell $1.15, or 2.7%, to $41.28 a barrel by 10:41 a.m. EDT (1441 GMT). The more active Brent contract for December fell 2.4% to $41.85.

U.S. West Texas Intermediate (WTI) crude fell $1.31, or 3.2%, to $39.29 per barrel.

More than a million people worldwide have died from COVID-19, according to a Reuters tally, a bleak milestone in a pandemic that has devastated the global economy and demand for fuel.

"The evolving Covid landscape is a massive downside risk for crude prices," said Craig Erlam, senior analyst at OANDA.

The heads of the world's largest trading houses predicted tepid oil demand recovery and flat prices in the coming months and possibly even years.

Clashes between Armenia and Azerbaijan over the Nagorno-Karabakh region have also kept markets on edge. If the conflict escalates, it could affect oil and gas exports from Azerbaijan.

"Disruptions to output and exports do not seem imminent. Nevertheless, the conflict has raised the geopolitical risk temperature," said oil broker PVM's Tamas Varga.

Kuwait's ruling Emir Sheikh Sabah al-Ahmad al-Sabah has died, his office said in a statement read out on state television.

And in a clear sign of weak demand in Japan, the world's fourth-biggest crude buyer, official data showed the country's August oil imports fell more than 25% from a year earlier.

(Additional reporting by Bozorgmehr Sharafedin in London, Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Susan Fenton, David Goodman and David Gregorio)

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