Oil falls over 4% as virus cases mount and U.S. debate loomsOil falls over 4% as virus cases mount and U.S. debate looms
Dust blows around a crude oil pump jack and flare burning excess gas at a drill pad in the Permian Basin in Loving County

By Scott DiSavino

NEW YORK (Reuters) – Oil prices fell over 4% to their lowest in two weeks on Tuesday on worries about the outlook for fuel demand as Europe and the United States grappled with a surge in new coronavirus infections.

Investors in commodities and stocks also remained cautious ahead of the first U.S. presidential debate between Democrat Joe Biden and Republican Donald Trump later on Tuesday.

On its second to last day as the front-month, Brent futures for November delivery fell $1.81, or 4.3%, to $40.62 a barrel by 12:03 p.m. EDT (1603 GMT), while the more active Brent contract for December fell 4.4% to $40.92.

U.S. West Texas Intermediate (WTI) crude fell $1.99, or 4.9%, to $38.61 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.

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.

In the United States, traders said there was some hope a new economic stimulus program could provide price support after U.S. Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi spoke in an effort to reach a compromise on coronavirus relief legislation. Pelosi’s office said the two plan further talks on Wednesday.

Investors were also looking for signs of growth in U.S. oil demand from American Petroleum Institute (API) data on Tuesday and from the Energy Information Administration (EIA) on Wednesday.

Analysts in a Reuters poll forecast U.S. crude stockpiles increased 1.4 million barrels last week.

(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)