By Adedapo Adesanya
Oil futures fell sharply on Tuesday, September 29, sending major benchmark crude prices down by more than 3 per cent, their lowest finish in two weeks.
The Brent crude fell $1.65 or 3.89 per cent to $40.78 per barrel while the United States West Texas Intermediate (WTI) crude lost $1.6 or 3.94 per cent to $39 per barrel.
Both Brent and WTI futures settled at their lowest front-month prices since September 15.
A rising number of COVID-19 cases had investors worried throughout the globe, a development that may harm appetite for oil and other energy assets in the longer-term. This was further complicated as a global death toll from the coronavirus pandemic, which surpassed one million.
Growing concerns about renewed coronavirus lockdowns in parts of the world have continued to put investors on alert as measures to control the spread are proving inefficient.
Also, three of the world’s biggest independent oil traders said consumption won’t meaningfully recover for at least another 18 months. The latest from Total SE said demand growth will end around 2030, adding to the negative outcome on Tuesday.
Clashes between Armenia and Azerbaijan over the Nagorno-Karabakh region have also kept markets on edge. If the conflict escalates, it could affect oil and gas exports from Azerbaijan.
Both sides blame each other for resuming the attacks that reportedly killed and wounded dozens as the decades-old conflict has reignited.
The Azerbaijani Defense Ministry claimed Armenian forces shelled the town of Tartar, while Armenian officials said the fighting continued overnight and then resumed offensive attacks.
Traders in the oil market will also continue to watch developments tied to conflict in southwestern Asia.
In Libya, meanwhile, the Sarir oilfield has restarted production, the head of the company that operates it said on Tuesday after eastern forces lifted an eight-month blockade on energy facilities. The possibility of additional crude despite current demand woes contributed to the market facing downward.
Investors will be looking for weekly data on U.S. oil stockpiles from the American Petroleum Institute (API) data and the Energy Information Administration (EIA) on Wednesday.
On average, analysts expect the EIA to report a climb of 1.9 million barrels in crude supplies for the week.
On the political scene, the market might weigh in on the outcome of the first US presidential debate between Democrat Joe Biden and Republican Donald Trump in Ohio scheduled for Wednesday morning.
Dipo Olowookere