Oil prices have slumped amid a sell-off of assets in the oil and gas industry, as uncertainty amid Covid-19 continues to harm investment.
Brent crude fell 7.7% to $38.51 per barrel by the end of Thursday, with West Texas Intermediate crude falling by 8.2% to $36.34 per barrel. The latter reached lows of $35.41 per barrel as uncertainty continues to plague the global oil and gas industry, making it something of a buyers’ market. While oil production, at least, had recorded improvements in recent weeks, with US inventory reaching a record high of 538.1 million barrels in the week ending 5 June, a 5.7 million barrel increase, this stability has not filtered down to the rest of the sector.
The news follows a webinar hosted yesterday by Fitch Solutions, where senior oil and gas analyst Emma Richards predicted significant disruption to traditional market processes as a result of Covid-19, which could impede long-term recovery.
“Covid-19 has disrupted those usual market mechanisms for adjustments, and that’s part of the reason why prices have fallen so low,” she said. “Demand has simply not been there, and so supply has had to go even lower in order to then shuttle supplies.”