As coronavirus cases rise rapidly around the globe, fears of the second, much more severe wave have been rippling through markets, and plunging crude prices to the lowest level in over four months.
On Wednesday, crude oil prices dropped for the second consecutive session by 4%, as near-exponential increases in coronavirus cases worldwide inflict oversupply concerns. Futures for the International benchmark Brent declined by 3.89% to $37.60 per barrel, the lowest since June. In the meantime, West Texas Intermediate (WTI) crude, which is slated for December delivery was dealt a similar fate, falling to $35.92 per barrel. In the prior session, both benchmarks dropped by more than 5%, which is the largest percentage drop since the beginning of September. Prices continue to fall in the current session.
A great deal of uncertainty has developed across energy markets As the coronavirus outbreak intensifies not only across the US but in Europe as well. Both France and Germany have already taken measures to impose a second round of partial lockdowns in order to curb record-high case numbers. Meanwhile in the US, the daily number of coronavirus infections has surpassed peak levels recorded during the first wave of the pandemic, while hospitalizations and deaths, which usually lag behind infections, have also been rising at an alarming rate.
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Meanwhile, Libya has resumed its production and crude exports, which has raised oversupply concerns. It is expected that Libya’s oil production will rebound to 1 million barrels per day within the next several weeks. Moreover, build-up at oil inventories in the US have also contributed to the downward spiral of oil prices. On Tuesday, the American Petroleum Institute (API) reported a 584,000 barrel increase of crude oil inventories over the prior week.
Information for this briefing was found via American Petroleum Institute. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
