https://arab.news/5m4jg
The global oil market has entered the fourth quarter on a bearish note after a major sell-off following US President Donald Trump testing positive for the coronavirus.
Uncertainty about the future of the US elections and the possibility of political chaos in the weeks ahead have had a negative impact on prices especially amid enduring concerns about the effectiveness of a new fiscal stimulus package.
Such worries along with tumbling stock markets distracted the market from a number of oil demand positives emerging from China.
Both international benchmarks fell below the $40 barrier as Brent crude dropped to $39.27 per barrel the lowest since early June and WTI fell to $37.05.
Speculators may have been cheered by the downward movement they wanted to see, but it may be short-lived. For them, the third quarter has been tough and the next three months are likely to be equally challenging as prices remain in a relatively narrow trading range.
It may be that their activity remains muted in order for them to preserve their bonuses which are calculated at year end and reflect their performance during the entire year.
The fourth quarter is also typically when most oil refineries start their fall maintenance season, which has a corresponding seasonal impact on crude oil demand.
It comes as global refined product supplies are extremely abundant, especially following the steep drop in air travel and ahead of what may be a warm winter. The may put further pressure on refining margins amid much lower demand for so called middle distillates which include diesel and jet kerosene.
As a result, some US and European refiners have idled their crude distillation column (CDU) units to deal with excess diesel and jet kerosene supplies.
With such an uncertain outlook it remain questionable if demand will return next year to pre-pandemic levels.