Another Difficult Day for the Oil Industry

 Oil companies and the industry as a whole have to deal with numerous challenges on a regular basis. Crude oil dropped to seven-week lows on Monday due to a combination of factors. One very serious issue is Covid-19 and its impact on oil consumption.

Currently, countries across Europe are struggling to improve the situation. The World Health Organization (WHO) is very concerned regarding the spread of Covid-19 in the region. A number of European countries saw angry protests against tougher restrictions turn violent over the weekend. Demonstrators clashed with police after thousands of people marched in Brussels. 

On Monday, Brent dropped 57 cents or 0.72% to $78.32 a barrel as of 02:06 GMT. Moreover, West Texas Intermediate (WTI) crude futures fell 39 cents or 0.51% to $75.55 a barrel. 

Brent, as well as WTI prices, hit their lowest since October 1 earlier in the session. Both of them fell around 3% on Friday. 

Oil prices and various factors

Japanese Prime Minister Fumio Kishida signaled on Saturday that he was ready to tackle soaring oil prices following a request from the U.S. Japan’s ally asked Japan to release its emergency stockpile. 

In the meantime, concerns are growing that renewed Covid-19 curbs could hit demand. Germany and other countries are trying to do whatever they can to stabilize the situation. The euro zone’s largest economy warned on Friday it may need to move to a full lockdown. Austria already introduced strict measures to tackle rising infections. The country imposed a lockdown earlier this month.

 The Netherlands also introduced strict measures as the government wants to reduce the number of new cases. Currently, the country is under a three-week nationwide partial lockdown.

 On Friday, the White House pressed OPEC again to maintain adequate global supply. Several days earlier, Biden’s administration discussed the situation with some of the world’s biggest economies. The White House wants countries to jointly release oil from their strategic reserves. However, it won’t be easy to persuade all countries due to various reasons.

 The U.S. Commodity Futures Trading Commission stated that money managers reduced their net long U.S. crude futures as well as options positions in the week to November 16.

 Investors also closely monitored the situation in the middle east. On Monday, Saudi state media released information regarding the conflict in Yemen. The Saudi-led coalition detected indications of imminent danger to navigation and global trade south of the Red Sea.