Oil prices fell over 5% to a three-week low on Wednesday as surging coronavirus infections in the United States and Europe are leading to renewed lockdowns, fanning fears that the unsteady economic recovery will deteriorate.
Brent futures fell $2.12, or 5.15%, to $39.08 a barrel, while U.S. West Texas Intermediate (WTI) crude settled 5.5%, or $2.18, lower at $37.39 per barrel, its lowest level in three weeks. That puts both benchmarks on track for their lowest closes since Oct. 2.
The United States, Russia, France and other countries have registered record numbers of COVID-19 cases in recent days, and European governments have introduced new curbs to try to rein in the fast-growing outbreaks. Adding pressure to oil prices, U.S. crude stockpiles rose more than expected last week as production surged in a record build, according to the U.S. Energy Information Administration.
Traders said crude prices were also hit by fading prospects for a quick deal on a new U.S. stimulus and increasing oil output from Libya. On Tuesday U.S. President Donald Trump acknowledged that a coronavirus economic relief package was unlikely until after next Tuesday’s election. Libya’s production is expected to rebound to 1 million barrels per day in the coming weeks.