Thursday, December 8, 2022

U.S. Crude Sinks Below $35 as Covid Fears Pummel Market By


© Reuters.

By Barani Krishnan – Oil prices tumbled for a second straight day on Thursday, hitting a near 5-month low, as the market reeled from fears of another global ramp-up in coronavirus cases and a surprisingly large weekly build in U.S. crude stockpiles.

New York-traded , the leading indicator for U.S. crude prices, tumbled to a session low of $34.93 per barrel, a bottom not seen since mid-June, before settling at $36.17, down $1.22, or 3.4% on the day.

London-traded , the global benchmark for oil, sunk to a near 5-month low of 37.26 before pulling back to finish the session at $37.65, down 1.47, or 3.8%.

Both WTI and Brent fell about 5% or more on Wednesday as Germany and France returned tlockdowns over the Covid-19. 

The market was also spooked by the by the Energy Information Administration’s reporting of a 4.3-million barrel rise in were for the week ended Oct. 23, against expectations for an increase of 1.23 million barrels. 

The crude build reinforced concerns about depleting demand for fuel despite and .

“With the demand side of the equation delivering a blow to oil prices, it’s up to the suppliers to even things out if they don’t want to see oil back in the low to mid 30’s,” said Craig Erlam, analyst at New York’s OANDA.

“OPEC+ has signaled a willingness to act, if necessary, and this is a warning by the markets that the time has come. A two million production increase in January is now surely off the cards, but more may be needed if prices continue to plunge as they have. I expect we’ll hear more from OPEC+ before the December meeting.”

The OPEC+ alliance is made up of 13 members of the Saudi-led Organization of the Organization of the Petroleum Exporting Countries and 10 oil producing allies steered by Russia. Since May, the alliance has succeeded in keeping crude prices above or near $40 per barrel with production cuts. 

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