head 3

$40 a barrel, 6% downfall in Crude oil price

For the first time since last June, the brent crude oil price faces a downfall of 6%, which means that it is now having $40 a barrel. The 6% decline is evident with both the Brent and West Texas Intermediate.

The price fall is evident in New York as well, it was in relation to the faltering demand and weaker equities dampening market sentiment.

The crude price leaped down because of the reasons like the slow consumption recovery in Asia, the US summer driving season came to an end, etc. this made the market weaker and led to the downfall in crude price.

Plus, the needles are also pointing to additional selling burden. Brent is flirting with its 100-day moving average, waiting to drop below it for the first time since mid-June.

Bill O’Grady, executive vice president at Confluence Investment Management in St. Louis said that the lack of fiscal support is starting to spook the markets a little bit.

“It’s showing up in oil with fears that you’re going to reduce demand coupled with stories circulating that Opec’s discipline is less than ideal,” he added.  

In the previous months Brent crude’s were trading with the global oil benchmark of $42 and $45 per barrel. Adjacent to this now the price has fallen below $40 a barrel.

Bank of America Merrill Lynch said that the recovery of the global oil demand will be back to normal only within three years.

The covid pandemic is still continuing its outrage and thus affecting the market as well.  

In a survey carried out by Bloomberg four of 10 Asian companies made it clear that they will be looking forward to buy more crudes from the Saudi Arabia, because the Kingdom cut short the pricing for October as the consumption rate remained less that that of pre-covid era.

Abu Dhabi National Oil Company also reduced the amount, as per now the response to a lethargic demand backdrop in the world’s biggest oil-consuming region.

Meanwhile, the updates from the market is not that good for the oil industry, as the signals point to more downside risk for oil prices. 

Comments are closed.