Crude oil traders are presently under immense pressure, as they log in their worst monthly loss since March.
The plunge in prices is coming on fresh restrictions placed on human mobility around Western Europe, in order to limit the spread of COVID-19. Thereby, strengthening concerns that demand would soften.
READ: National Assembly approves Federal Government’s plan to borrow $11 billion in 2021
What we know: The U.S oil-based contract, popularly known as the West Texas Intermediate – the major indicator used for U.S. crude prices, sold at 35.79 per barrel.
- For the month, the oil contract recorded a drop of 11%, the sharpest decline since March.
- London-traded oil contract, Brent crude, settled at $37.94 per barrel. Brent registered a monthly loss of 7.4% for October.
READ: Liquefied natural gas outperforms in Q3, shows more upside
What they are saying
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the geopolitical macros distorting oil prices.
“Fresh worries that politicians worldwide will be pressured to lock down Christmas this year is hitting the oil markets like a ton of bricks.
READ: Banks lay-off 2,477 staff during lock-down
“We are in the thick of the Covid-19 haze now. Winter is coming to the northern hemisphere, where crowding and social- behavioral patterns could be a frightening source of a seasonality bounce in the COVID-19 curve.
“Indeed, the alarmingly high level of angst in the markets makes it easy for the oil roller coaster to crest rally peaks and head downhill at alarmingly quick speeds.”
READ: FG hires litigation firm, Franklin Wyatt, in legal battle with Eni S.p.A
Bottomline
Oil traders might continue to see oil prices plummeting going forward. As a distortion in energy demand/supply rebalancing takes into effect amid new restrictions seen in the Northern Hemisphere, market sentiments will be significantly affected.
