Oil Prices Fell to The Lowest Level in Seven Weeks, Why?

Baker Hughes reported, Friday, that the number of active U.S. rigs drilling for oil rose by seven to 461 this week.

The new figures followed increases in each of the previous three weeks, including a climb of four oil rigs last week, Baker Hughes data shows.

The total active U.S. rig count, which includes those drilling for natural gas, also surged by seven to stand at 563, according to Baker Hughes.

December West Texas Intermediate crude was down $2.77, or 3.5%, at $76.24 a barrel on the New York Mercantile Exchange.

On Monday, oil prices fell to a seven-week low, remaining under pressure after Japan said it was pressing to release oil reserves. As the coronavirus situation worsened in Europe, raising concerns about oversupply and weak demand, Brent lost 26 cents, or 0.3%, to $78.63 a barrel. US West Texas Intermediate crude futures fell 12 cents, or 0.2%, to $75.82 a barrel.

Oil investors in Singapore see that the market is in a state of constant change, as the issuance of strategic petroleum reserves has not been fully priced yet. As a result, West Texas Intermediate crude and Brent crude prices recorded their lowest levels since October 1, earlier in the session, and fell by about 3% on Friday, Low for the fourth week in a row for the first time since March 2020.

Japanese Prime Minister Fumio Kishida hinted on Saturday that he was ready to help combat high oil prices following a request from the United States to release oil from emergency stocks in an unprecedented move. Tokyo is exploring ways to bypass a law that allows the release of oil reserves only in cases of supply shortages or disasters.

On Friday, the White House pressured the OPEC group of producers again to maintain adequate global supply, days after the United States debated with some of the world’s largest economies about the possibility of freeing oil from strategic reserves to quell rising energy prices.

Adding to the pressure on prices, lockdowns are likely to be renewed in Europe as coronavirus cases soar again. Germany warned on Friday that it might need to move to complete lockdown after Austria said it would reimpose strict measures to tackle rising infections.