Oil futures were sharply lower Thursday, with prices logging their lowest settlement since mid-September, as worries about rising cases of COVID-19 worldwide fed expectations for a slowdown in energy demand.
West Texas Intermediate crude for November delivery dropped $1.50, or 3.7%, to settle at $38.72 a barrel on the New York Mercantile Exchange, following a 2.4% gain on Wednesday.
Prices for the U.S. benchmark, based on the front-month contracts, saw monthly fall of 5.6%, but ended 2.4% higher for the quarter, according to Dow Jones Market Data. Oil prices in September suffered their first monthly decline since April.
December Brent crude shed $1.37, or 3.2%, at $40.93 a barrel after trading as low as $39.92 on the ICE Future Europe exchange.
Prices for both WTI and Brent marked the lowest front-month settlements since Sept. 15 reported MarketWatch.
“The oil market can’t shake its demand fear funk even though U.S. oil supply continues to tighten,” said Phil Flynn, senior market analyst at The Price Futures Group. The Energy Information Administration on Wednesday reported an unexpected decline of 2 million barrels in U.S. crude supply. That marked three weekly declines in a row.
“Lingering demand concerns makes the market less concerned about the trend of tightening supply,” said Flynn, in a daily report.
Crude oil investors have closely followed the spread of the disease because it can have a detrimental impact on appetite for oil as economies stall. Europe was implementing or planning to reinstitute new social-distance restrictions as COVID-19 cases climb.
On top of those possible drags in oil sentiment, supplies are percolating higher. A recent survey by Reuters pointed to increased oil supply from the Organization of the Petroleum Exporting Countries, with output in September up 160,000 barrels per day from August.
“As the OPEC+ production cuts enters their 6th month, producers are getting eager to increase their production,” said Manish Raj, chief financial officer at Velandera Energy. That raises a question over “how long oil producing nations will restrict their production; and any sign of growing non-compliance is highly negative for oil markets.”
Source: MarketWatch
