The price of the WTI plunges below 40 dollars following concerns about the world demand for black gold.
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The price of a barrel of oil listed in New York fell 5% on Tuesday, in a market still worried about the grim outlook for global demand for black gold with the resumption of the COVID-19 pandemic.
At around 4:35 p.m. GMT, a barrel of WTI for November delivery fell 4.75% to $ 38.67 on the New York Mercantile Exchange (NYMEX) after dropping to $ 38.41.
In London, a barrel of Brent from the North Sea for delivery at the same deadline dropped 4.20% to 40.65 dollars.
“The barrels of Brent and WTI are in the red, as the general downward trend caused by the health crisis discourages hopes of a recovery in demand,” notes David Madden of CMC Markets.
The COVID-19 pandemic, which started at the end of 2019 in China before spreading around the world, indeed crossed the one million dead mark on Monday, according to an AFP count.
“In August, oil imports in Japan plunged by 26%, which illustrates the impact of the pandemic”, underlines the expert of CMC Markets, who however considers the extent of Tuesday’s drop a little too important .
The market also fears an oversupply, which would put strong pressure on prices.
At the beginning of last week, the announcement of the gradual return of production and exports to Libya by the Libyan National Petroleum Company (NOC) had cast a chill among investors.
Last Wednesday, the US Energy Information Agency (EIA) reported that crude production in the country had rebounded a bit the week before, with the US extracting an average of 10.8 million barrels per day (mbd), which however remained far from the peak production of 13.1 mbd reached in March.
The agency will also update these figures, as well as stock levels, Wednesday at the start of US session.
According to the median of expert estimates polled by Bloomberg, crude reserves rose by 1 million barrels last week. They had fallen 1.6 million barrels the previous week.
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