Global oil prices fell to their lowest levels since the start of July this morning amid fears that demand is stalling as coronavirus infections surge around the world.
Worldwide standard Brent crude fell over two per cent to trade at $41.13, the lowest it has changed hands in two months.
US benchmark West Texas Intermediate fell even more, shedding 4.2 per cent to trade around the $38 mark.
The declines marked the fifth straight session in which oil prices have fallen, with the steady increase since May’s historic lows now being gradually eroded.
Concerns that the rate of new infections continues to grow are behind the falls, with rising numbers of cases reported in the UK, US and India yesterday.
According to Rystad Energy oil markets analyst Paola Rodriguez-Masiu, “today’s oil price move is a clear sign that the market now seriously worries about the future of oil demand and not just plays a bearish-bullish daily trading game that sends prices swinging”.
“The streak of losses is driven by a stalling crude demand outlook for the rest of the year, with rising cases of Covid-19 and the end of the summer driving season in the US, as well as, Asian refineries putting on breaks”, she added.
“Further deterioration of relations between the world’s first and second economies send additional chills to the market, with President Trump stating that he intends to “decouple” US economy from China.”
Yesterday Saudi Arabia’s state oil company Aramco cut October’s selling prices for light oil, which analysts said was a sign that demand was stuttering.
Producer cartel Opec will meet next week to discuss the state of the market, which it is currently propping up through record production curbs.
It reduced the caps from 9.7m barrels per day to 8.5m barrels per day in August on hopes that demand would continue to rise as global economies came out of lockdown.