Oil prices fell to a five-month low on Thursday. The impact of the renewed coronavirus lockdowns a day ago, on oil demand caused a sharp decline.
December Brent crude LCOc1 futures settled lower at $37.65 a barrel, down $1.47, or 3.76%. During the session, the contract traded as low as $36.64, the lowest in five months. The more active January contract lost 4% to $38.11 a barrel.
West Texas Intermediate (WTI) crude CLc1 futures settled at $36.17 a barrel, down $1.22, or 3.26%. The contract touched its lowest since mid-June at $34.92.
Both contracts plunged by more than 5% on Wednesday.
The market is under extra pressure in demand concerns, with lack of US economic stimulus on top of the increasing COVID-19 cases. Libya, which currently produces 680,000 barrels per day, will increase its production to 1 million barrels a day in the next few weeks. OPEC plans to reduce its production cuts from 7.7 million barrels to 5.7 million barrels in January 2021.
Due to the rising COVID-19 cases across Europe, it has been decided to stay home in France since Friday, except for basic activities. Germany, on the other hand, will close bars, restaurants and theaters from November 2 until the end of the month.
The Organization of Petroleum Exporting Countries (OPEC) and its allies will closely monitor the deteriorating demand outlook and the growing supply of its member Libya.
The probability of increasing oil production in January is getting less day by day. Instead, OPEC and its allies will need to implement further production cuts given weak demand expectations, as it was confirmed by the Russian president.
OPEC + will meet on 30 November and 1 December to make his policy.
The oil had initially recovered somewhat due to the technical support it received from morning trade in Asia and Hurricane Zeta. However, with the hurricane weakening byThursday morning, the return of US production will not take long and supply is predicted to increase.