Oil prices plummeted Wednesday after US inventory showed demand for refined products was weakening as global COVID-19 cases increased.
The market is seriously grappling with demand after the continued rise in COVID-19 cases. Worldwide COVID-19 cases exceeded 40 million on Tuesday, and parts of Europe have implemented renewed lockdown measures.
Brent crude futures LCOc1 settled at $41.73 a barrel, down $1.43, or 3.3%, as of 12:48 p.m. ET. West Texas Intermediate (WTI) crude CLc1 futures dropped $1.67, or 4%, to $40.03.
Both benchmarks rose in the previous session.
Crude oil stocks declined by 1 million barrels on the week of October 16 to 488.1 million barrels, while gasoline stocks also rose, pointing to low fuel demand.
Total product supplied, which is an indicator of demand, decreased by 13% compared to the previous year in the last four weeks.
Brent is particularly affected by weak demand in European regions experiencing new lockdowns.
On Tuesday, Russia’s energy minister said plans to reduce production restrictions should continue. It’s hard to predict whether there will be global oil production restrictions beyond December.
The increase in production by Libya, an OPEC member which is exempt from cuts, disrupts the balances. With production expected to double by the end of the year, it rose to around 500,000 barrels a day.
While the White House and Democrats are trying to make a deal ahead of the November 3 presidential and congressional elections, the new US coronavirus aid bill is showing positive signals, encouraged by the President.