Oil nosedives over 5% as US crude inventories hit record, pandemic worries mount

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Oil nosedives over 5% as US crude inventories hit record, pandemic worries mount

On Wednesday, both US and UK crude futures tumbled as much as 5 per cent or over $2 per barrel followed by another record upsurge in US crude oil inventories amid an upscaled panic-driven sell-off in light of mounting pandemic cases in the United States.

In point of fact, the crude oil futures’ prices had been met with a double whammy on Wednesday’s commodity market, as pandemic cases had reportedly been rising in the heavily populated US states, Germany alongside India and LATAM nations, while a rise in US crude oil stockpile had added further strains to the oil futures prices, which had been enjoying a bullish wave over the recent months after factually hitting a below-zero level for the first time on record in March.

Third straight record surge in US crude storage pummels oil market

In tandem, while a stronger US dollar alongside a feeble equity market appeared to have weighed on crude oil futures on Wednesday’s commodity market, the US crude stockpile had registered the third straight record for US crude inventories, while according to the data from EIA (Energy Information Administration), the US crude inventories had inflated by 1.4 million barrels last week, beating an analysts’ estimate of a rise of 299,000 barrels.

Citing statistics, the UK crude futures’ prices had winded down the day 5.4 per cent lower to $40.31 a barrel after hitting its highest level since mid-March a day earlier, while the US WTI (West Texas Intermediate) crude futures’ prices were hit with a whiplash of 5.8 per cent to settle down the day at $38.01 per barrel.

Besides, referring to a menacing market uncertainty driven by the worries over a second wave of pandemic outbreak, a Vice President of Market Research at Tradition Energy in Stamford, Connecticut, Gene McGillian said on the day’s commodity market closure, “The market is signalling that if it doesn’t get constant reassurance that we are emerging from the breakdown in demand that happened because of the pandemic, then higher oil prices really don’t make sense”.