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Stimulus deadlock and increased US crude stocks drop oil prices

by Bunkerist
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Oil prices plummeted on Wednesday after the President of the US shattered hopes of a fourth stimulus package to boost the economy hit by the coronavirus.

West Texas Intermediate (WTI) crude oil futures declined 42 cents, or 1%, to $40.25 a barrel by 0648 GMT, while Brent crude futures fell 30 cents, or 0.7%, to $42.35 a barrel.

After the president finished fiscal stimulus negotiations and the US crude oil stocks published, all risky assets went into free fall. Crude oil prices were also affected by this situation.

Just a few weeks before the US presidential election, the President made a decision that surprised the markets and ended discussions on the economic aid package. While most analysts did not expect an agreement to be reached before the election, the abrupt end dropped all risky assets sharply.

Data from the American Petroleum Institute showing that US oil stocks increased by 951,000 barrels last week also put pressure on prices. However, the losses were limited by global constraints on the supply side.

As Hurricane Delta threatened US oil production in the Gulf of Mexico, energy companies secured offshore production platforms, and workers were evacuated Tuesday for the sixth time this year.

The storm stopped 29.2% of offshore oil production in the Gulf, which accounts for 17% of total US crude oil production.

If a wage agreement on the workers’ strike in Norway is not reached, it is said that union would expand the ongoing strike as of October 10. Six offshore oil and gas fields closed Monday due to the strike, and the country’s production capacity decreased by 8%

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