Oil prices dropped significantly on Wednesday, hovering near its lowest level since early October, amid fears from both supply demand sides and as investors triggered risk off mode.
Crude oil futures prices dipped 4.88 percent to $37.65 a barrel, while Brent crude futures slipped 3.98 percent to $39.97 a barrel.
With the stunning increase in coronavirus cases across Europe and the United States and suggestions of a temporary lockdown in Germany and France, investors have resorted to safe haven at the expense of risky assets.
Meanwhile, there rising speculations that French President Emmanuel Macron is predicted to impose a new four-week national lockdown to slow the rapid spread of Covid-19.
By the same token, German Chancellor Angela Merkel is proposing the closure of bars and restaurants for one month.
The intensifying worries in the financial markets has pushed the Euro STOXX 600 benchmark to its lowest level in five months.
Expectations of seeing a lockdown in key European countries could eventually halt economic recovery and may even jolt the euro area into a recession.
On the supply side, U.S. crude oil and gasoline stocks soared last week, data from the American Petroleum Institute released on Tuesday showed.
Later in the day, the EIA government report may signal that U.S. crude stockpiles increased by 1.5 million barrels last week, following a 1-million barrel drop a week before.
Compiling further pressure on oil markets, Libya’s production is expected to rebound to 1 million barrels per day in the coming weeks.
As of 12:00 GMT, the dollar index, which tracks the green currency’s movements versus a basket of major currencies, strengthened to 93.50 from the open prices of 93.12.