Oil prices dropped sharply on Thursday as fears resurfaced that a second wave of coronavirus could hit the US and stunt economic activity, while data showing that US oil inventories surged last week also subdued prices.
On Wednesday, data showed US commercial crude oil inventories rose by 5.7 million barrels compared to the previous week, stoking fears that demand is yet to recover from its pandemic lows.
West Texas Intermediate, the US benchmark, plummeted as much as 11%, to $35.41 per barrel. International standard Brent crude tumbled 9.1%, to $37.94 per barrel, at intraday lows.Advertisement
Naeem Aslam, chief market analyst at Avatrade said: “Oil is down because of two major reasons. First is a fear of a second wave of coronavirus which raises the odds of another lockdown and slower reopening of the economy.”
He said the fact that US crude oil inventories have risen brings into question how quickly demand for oil can recover, particularly if the US and other countries face the spectre of longer lockdowns.