HOUSTON—Oil prices dropped more than 7% to a multi-month low as analysts worry about the future demand of crude, CNBC reports. West Texas Intermediate crude plummeted 7.6% to $36.76 a barrel this week—a low point not seen since June. Brent crude declined more than 5.3% to reach $39.78 a barrel, also its lowest level since June.
“Today’s oil price move is a clear sign that the market now seriously worries about the future of oil demand,” said Paola Rodriguez-Masiu, senior oil markets analyst at Rystad Energy. “The streak of losses is driven by a stalling crude demand outlook for the rest of the year, with rising cases of COVID-19 and the end of the summer driving season in the U.S., as well as Asian refineries putting on [the] breaks.”
Since April, when crude prices fell into the negative, oil prices have rebounded. In July, some analysts predicted prices would soar to $150 a barrel by 2025. Last month, Bank of America predicted oil prices would recover to $60 a barrel by early 2021.
But recently, oil prices have registered losses. Tuesday’s dip came after Saudi Aramco slashed its official selling prices for October, which set off fresh concerns about demand. Bank of America’s recent client notes said it would be three years before oil demand recovered completely from the effects of COVID-19.
“The market has its eye on the big picture: where and when we see demand normalize globally and what happens with both U.S. production and [the] OPEC+ agreement over the medium term,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.