Meanwhile, Equinor's CEO rejects $40 oil as the new normal: File Image/PixaBay
Crude traders on Thursday doubled down on their worries over government lockdowns in Europe potentially affecting demand causing oil prices to plummet by over 4 percent to a five month low.
Bob Yawger, director of energy futures at Mizuho, said, "People are reacting to Covid cases that are spiking - they are reacting to the number of new cases," which in turn has prompted France to order its citizens to stay home for all but essential activities and Germany to close bars, restaurants, and theatres.
The December Brent contract dropped $1.66, or 4.2 percent, at $37.45, while West Texas Intermediate declined $1.50, or 4 percent, at $35.89.
OPEC and its allies would really need to implement further production cuts
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) is set to meet on November 30 and December 1 to establish policy moving forward, and this prompted Commerzbank to remark, "[We] believe it is increasingly unlikely that oil production will be stepped up from January; instead, OPEC and its allies would really need to implement further production cuts, given the weak prospects for demand."
Among more positive signs today was a Fox News report highlighting that the American economy grew at a record 33.1 percent annualized pace in the third quarter. Also, Royal Dutch Shell on Thursday reported better-than-expected third-quarter earnings of $955 million for the three months through to the end of September and announced plans to increase its dividend to shareholders by 4 percent.
This comes on the heels of BP swinging back into profit during Q3.
Looking at the price picture father ahead, for his part, Eldar Saetre, CEO of Equinor, rejected the idea that $40 oil may be the new normal: "I don't think so, he told Bloomberg, adding that "we do see a strengthening at some point" - although he agreed that "significant uncertainties" are plaguing the oil industry.