Crude oil futures slumped as WTI cracked under $40 per barrel. The futures fell nearly 4% in last session and fell another 1% to trade at $38.91 per barrel.
Oil extended losses after hitting a week-high on Monday due to strong equity markets and the proposal of House Democrats of a new stimulus package worth US$2.2 trillion. Oil traders eyed rising output from Libya. Crude oil production in Libya is soaring following the restart of Libya’s oil industry and exports. Last week, Liboya’s National Oil Corporation (NOC) lifted the force majeure on the Zueitina port after seeing significant improvement in the security situation that allows the National Oil Corporation (NOC) to resume production and exports to global markets.
Demand concerns continue to weigh on oil. Global oil demand will decline by 9.5 million barrels per day (mb/d) in 2020 amid ongoing uncertainties, Organization of Petroleum Exporting Countries (OPEC) Secretary-General Mohammad Barkindo said Sunday, media reports noted.
Oil prices fell for a second day on Wednesday
Oil prices fell for a second day on Wednesday, extending big losses from the previous session amid rising concerns about fuel demand as the corona virus pandemic worsens. U.S. benchmark crude futures fell 3.2%. Brent dropped below its 100-day moving average as global confirmed deaths from the corona virus top 1 million. Adding to concerns over the state of the demand recovery, the market is contending with an increase in supply from OPEC+ members. Russia likely exceeded its OPEC+ quota, compounding the worry that the group may be adding more supply than the market can handle. To counter the fall in demand the Organization of the Petroleum Exporting Countries is unlikely to increase oil production as planned from January next year, traders said on Tuesday. The market looked past data from the American Petroleum Institute on Tuesday showing U.S. crude oil stocks fell against expectations, focussing instead on the rise in gasoline inventories.
TREND : WEAK BEARISH