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News Article

Oil Prices Drop Again as COVID-19 Cases Rise Worldwide

By Peter Appleby | Tue, 09/29/2020 - 18:01

Oil prices once again dropped in reaction to the climbing number of positive COVID-19 cases, as the world passes a gloomy milestone of 1 million COVID-19 deaths.

The US benchmark crude mix, WTI, fell US$1.31 to US$39.29 per barrel on Tuesday, after hitting a low of US$38.45 earlier in the day. The Brent mix also dropped US$1.40 to US$41.03 per barrel, reports AP. The price of the Mexican crude oil basket for today is yet to be published, though the barrel has enjoyed a slow but steady climb in price during the past week, up US$0.89 between Sept. 21 and Sept. 28.

Oil stocks have struggled over the last few days as countries saw a spike in cases. Over the past week, France, the Netherlands, the UK and Indonesia have all seen their highest rise in cases since the pandemic began, while experts and public figures have voiced concern about the increased rates of cases in US states including Alaska and New York. UN Secretary-General António Guterres said that the 1 million deaths milestone confirmed to be broken on Tuesday by John Hopkins University was a “mind-numbing” figure, while the World Health Organization warned that 2 million deaths is “not impossible”.

Additional cases today have increased the jitters the markets have been feeling, with the April’s disastrous price collapse still fresh in the mind of many. Another fall towards zero would be catastrophic for an industry that has seen supply inventory almost maxed out over the past several months. In April, with global storage full, crude oil became “effectively worthless.” The industry will be hoping to avoid another situation whereby “a barrel of oil now costs less than a cheap bottle of wine,” as AP reported in early April.

Oil prices have rebounded strongly since the price collapse but all industry stakeholders are aware of the COVID-19 threat. Earlier this month, OPEC+ held an emergency meeting after cases rose at an alarming rate in India, a major oil consumer with a population above 1 billion. Aside from COVID-19, the dispute between Armenia and Azerbaijan provides another worry for oil and gas transport across the Near East and Eastern Europe.

Photo by:   M.B.M, Unsplash
Peter Appleby Peter Appleby Journalist and Industry Analyst