OIL PRICES SINK AS INVENTORIES SKYROCKET

Oil prices dropped sharply Wednesday (Thursday, October 29, 2020 in Manila) as mushrooming numbers of coronavirus cases in Europe and the United States threatened to head off further recovery in demand for oil or even lead to renewed falls in consumption, Stanley Reed reported for the New York Times. 

Adding to traders’ concerns, the supply of crude is rising faster than some analysts predicted. Producers in the United States have added volume and Libya, where fighting has depressed production for months, suddenly ramped up output. “Supply is higher than people anticipated and demand is plateauing,” said Bhushan Bahree, executive director at IHS Markit, a research firm. The price of West Texas Intermediate crude, the American standard, fell about 5.7 percent to $37.33 a barrel, the lowest level since June. Brent crude, the international benchmark, dropped 5.2 percent to $39.06 a barrel. 

Until recently, crude prices had held their ground after recovering from their April lows when some futures prices plunged into negative territory. Now, though, worries over market fundamentals are kicking in again. The potential for new restrictions to cope with growing numbers of coronavirus cases in countries like France and Germany could lead to a drop in oil consumption there on the order of 10 percent, analysts at Rystad Energy, a Norwegian consulting firm said on Wednesday. 

In addition, the looming presidential election in the United States on Nov. 3 is adding volatility and uncertainty, analysts say. A victory by Joseph R. Biden Jr., for instance, could eventually lead to tighter regulation of the oil industry in the United States, while President Trump would likely push in the opposite direction if he remained in the White House.