Oil at its lowest for four months, fear of demand

Shortly before noon, Brent plunged below 38 dollars, down 3.20%, and WTI gave 3.48% to 36.09 dollars.

Oil prices were down sharply again on Thursday, hitting a low since June 15, as the rapid spread of Covid-19 is leading to drastic measures in Europe limiting crude consumption.

At around 10.50 a.m. GMT (11.50 a.m. CET), a barrel of Brent from the North Sea for December delivery was worth $ 37.88 in London, down 3.20% from Wednesday’s close.

In New York, the US barrel of WTI for the same month dropped 3.48% to 36.09 dollars.

After losing more than 3% on Monday and then more than 5% on Wednesday, the two benchmark contracts fell to their lowest for more than four months.

“The market remains nervous about a second wave of the coronavirus pandemic which has already caused prices to drop during the previous session,” noted Avtar Sandu, analyst at Phillip Futures.

The “new containment measures in Germany and France and the multiplication of Covid-19 cases in the United States have torpedoed oil prices overnight,” added Jeffrey Halley, from Oanda.

After Italy, Ireland or the Netherlands, new drastic measures were announced Wednesday evening in France and Germany to counter the spread of Covid-19, measures that severely limit the demand for black gold while supply is increasing, in particular because of the return to the Libyan production market.

This widening gap between supply and demand leads to a surplus situation and, mechanically, an increase in crude stocks.

This is the case in the United States, where they increased by 4.3 million barrels last week according to weekly figures from the US Energy Information Agency (EIA) released Wednesday, while analysts were expecting an increase to be three times less.

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In addition, “two-thirds of American production in the Gulf of Mexico is at a standstill,” Mr. Sandu reported due to the passage of Hurricane Zeta over an area concentrating refineries and oil platforms.

Zeta made landfall on Wednesday afternoon near New Orleans, Louisiana, with winds of up to 130 km / h, after losing power slightly, according to the National Hurricane Center (NHC ).

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