Crude oil prices dropped significantly on Thursday and fell below its multi-week lows on recent US data report revealing gasoline demand fell and recovery from the COVID-19 pandemic was not encouraging.
U.S. West Texas Intermediate down 0.34% to trade at $41.34 a barrel by 8.09 GMT. Brent crude prices were also down by 0.41%, to $44.25 a barrel.
Both Crude oil benchmarks dropped more than 2% yesterday, with WTI sliding to its lowest closing in nearly four weeks and Brent Crude prices at its weakest since Aug. 21.
U.S. gasoline demand last week dropped to 8.78 million barrels per day from 9.16 million barrels per day a week earlier.
Stephen Innes, Chief Global Market Strategist at AxiCorp in a detailed note to Nairametrics, explained why the black liquid derivative price is under pressure lately. He said:
“My consistent view was those near-term headwinds from the uncertain macro environment, seasonal gasoline demand drops off, and winter fear of the virus could lead to a correction in the coming weeks.
“Still, like everything in this pandemic trading environment, time compression is a huge factor. What I expected to happen over the next 14 days occurred in 14 hours.
“Also weighing on top side momentum were comments that Russia will propose to OPEC+ to react to the recovery in global oil demand, which has now reached 90 percent of the levels seen before the pandemic, Russia’s Energy Minister Alexander Novak said on Wednesday.
“While OPEC+ is extremely sensitive to downside moves, thereby curbing production, this latest Russian demand could influence OPEC to add more barrels quicker to the market on a more price-sensitive basis.”
The Organization of Petroleum Exporting Countries and allies, a grouping known as OPEC+, is currently curbing output by 7.7 million barrels per day (bpd) until December to support prices as the coronavirus crisis hammers demand.