Crude oil traders are under immense pressure as oil prices dropped more than 3% within a few hours ago. Brent crude plunged as much as 5.8% and the West Texas Intermediate lost as much as 6% in early trade – hitting their lowest levels since May.
The plunge in oil prices is coming on worries of a swathe of COVID-19 lockdowns across emerged markets with softening fuel demand – coupled with the bias for more turbulence ahead of the U.S. presidential election scheduled to hold tomorrow.
What we know
- Brent crude prices at the time of writing, traded at $36.78 a barrel – down over 3.1%.
- Also, the U.S based oil contract West Texas Intermediate traded at $34.55 a barrel, printing a drop of more than 3.5%.
- Brent crude plunged as much as 5.8% and the West Texas Intermediate lost as much as 6% in early trade – hitting their lowest levels since May.
- France, United Kingdom, and Germany have imposed new lockdown measures aimed at curbing COVID-19 infection rates, which have accelerated across the Northern hemisphere at unprecedented levels.
What they are saying
In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, spoke on the current macros giving oil traders serious headaches at the moment amid falling oil prices seen in its recent price action.
“Traders had priced the initial downward adjustments to European road fuel demand.
“I suspect their initial Eurozone 2nd wave forecast was too optimistic after France intensified the lockdown measure, forcing analysts to quickly downgrade their Q4 economic outlooks, which likely intensified the selling pressure.
“OPEC+ manages the supply-side to ensure a March rollover repeat in November remains unlikely.
“Nonetheless, traders appear to be setting up for a re-run of the associated price collapse we saw then, as uncertainty around the end of the month OPEC meeting has the oil complex hedging that it might be too premature for OPEC+ to make adjustments at this stage.”
That said, a build-up to this winter season could turn quietly chaotic for oil markets, as folks will opt to isolate rather than celebrate – possibly sending both mobility and fuel consumption lower.