Oil Prices Dive to Three Weeks Low Amid Fears of Supply Overhang and an Ominous Surge of a Second Covid Wave

Crude oil prices slipped as much as 5% on Wednesday, in anticipations of oversupply and pressured demand as fresh coronavirus infections in the US and Europe are leading to renewed lockdowns, adding to the agony of the oil market which is already grappling with deteriorating demand under stressed economy.

Recording three weeks low, benchmark Brent crude futures plunged by $2.12 or 5.15 per cent to $39.08 per barrel while U.S.WTI crude lowered by 5.5%, or $2.18 to $37.39 per barrel during the session, closing at their lowest since October 2. As per the data from the American Petroleum Institute (API), the fall has been exacerbated by an unabated rise in the US crude oil inventories which have risen bigger-than-expected by 4.6 million barrels to about 495.2 million barrels in the last week. Moreover, overflowing gasoline inventories have added to the woes.

The United States, Russia, France and several other countries have registered a greater number of new COVID-19 cases in recent days, forcing European governments to announce new curbs to control the contagion. Some traders remarked that crude prices were also hit by increasing oil output from Libya which is expected to cross 1 million barrels per day in the forthcoming weeks.

The news comes amid chaos when energy firms and ports along the Gulf of Mexico prepare themselves for Hurricane Zeta, the 11th hurricane of the season, later Wednesday, causing shutdown of nearly half of U.S. offshore Gulf of Mexico oil production.