Oil rig

  • Oil fell as much as 5% on Friday after Presidnet Donald Trump said he had tested positive for COVID-19. That decline far outpaced other asset classes.
  • Trump’s test has no direct impact for the oil market right now, but it has brought into stark focus the risks to both supply and demand, analysts said.
  • Crude oil is set for its biggest weekly slide since the end of August and the price is approaching recent three-month lows.
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Affter US president Donald Trump tweeted early on Friday morning that he and his wife had tested positive for COVID-19, global financial markets went into a tailspin. Stocks, cryptocurrencies, and industrial commodities slid sharply and gold and safe-haven Treasuries rallied.

But it was oil that took the hardest hit. 

The price of WTI crude oil plunged by as much as 5% at one point on Friday, while the S&P 500 slid just 1.7% at intraday lows, while the dollar index rose roughly 0.1%. That put crude on pace for its biggest weekly fall in weeks.

Trump’s positive COVID-19 unnerved investors, but has little direct, immediate impact on the broader financial markets, even with the presidential election just one month away now.

Crude is one of the most sensitive commodities to geopolitics and the economy, along with stocks and the dollar, but the reaction in the market on Friday was more in keeping with that to a direct supply or demand shock, than to a development in Washington DC. 

Here’s why the oil market seemingly took the news of Trump’s test so hard: 

With Covid-19 rearing its head, demand looks less rosy

Since falling to a historic negative $40 a barrel in April this year – when the coronavirus pandemic brought