[Asia Economy New York=Correspondent Baek Jong-min] The factor that ultimately curbed the soaring oil prices was COVID-19. When Austria implemented lockdown measures due to the spread of COVID-19, oil prices plunged nearly 4%.
On the 19th (local time) at the New York Mercantile Exchange, the December West Texas Intermediate (WTI) crude oil price closed at $76.10 per barrel, down $2.91 (3.7%) from the previous session. During the session, WTI fell more than 4%, trading at $75.37 per barrel.
WTI dropped to its lowest level since October 1st on the expiration date of the December contract. The next nearby contract, January WTI, also closed down $2.47 (3.2%) at $75.94 per barrel, showing a marked weakness. North Sea Brent crude also fell to $78.15 for the first time since last month’s 1st.
CNBC reported that this is the first time in nearly a year that WTI has closed lower for four consecutive weeks. WTI had reached $85 per barrel on the 25th of last month, marking the highest level in over seven years.
Although WTI has fallen about 11.5% from its peak, its year-to-date gain still stands at 55%.
Following Austria, countries like Germany have expanded lockdowns, spreading concerns about a slowdown in oil demand, which sharply dampened investor sentiment in crude oil.
WTI showed an upward trend in early trading that day but immediately reversed to a decline after Austria’s lockdown announcement, failing to find a rebound opportunity.
The decline in oil prices also reflects supply-side factors. The U.S. proposed supplying strategic reserves to markets such as China, and with increased operation of U.S. oil drilling rigs, expectations for expanded oil production have also formed.
Reflecting this situation, the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) warned that future oil supply could actually exceed demand.
Although international oil prices have fallen, it is expected to take a considerable amount of time before U.S. consumers feel a drop in gasoline prices.
U.S. President Joe Biden, facing a sharp drop in approval ratings amid rising inflation including oil prices, recently ordered the Federal Trade Commission (FTC) to investigate collusion in the oil market to induce a decrease in gasoline prices.
The average gasoline price in the U.S. is $3.413, significantly higher than last year’s $2.18. The average gasoline price in California reaches $4.7.
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