WTI dives below $70.00, down more than 11%, worst fall since 2020’s negative price debacle

Front-month WTI futures have been getting absolutely battered in recent trade and have recently dropped below the $70.00 level. That marks a more than $8.50 decline (over 11%) on the day, its worst such day since the front-month WTI futures contract swung deeply into negative territory in April 2020.

The oil market’s implosion comes on a day when countries across the world have been implementing (or are considering implementing soon) travel restrictions to countries where cases of the new, highly concerning South African Covid-19 variant have been detected. As the new variant spreads, which it is expected to do over the coming weeks, it seems highly likely that further travel restrictions will be imposed. All of this could be catastrophic for jet fuel demand, a key component of global crude oil consumption.

The latest developments in oil markets have not gone unnoticed by OPEC+. According to sources cited by Reuters, the cartel is monitoring developments around the new, concerning Covid-19 variant and some members are expressing concern that it may worsen the outlook for oil markets. The group meets next week to decide on oil production policy and there is already speculation that they might implement new output cuts. The group was already rumoured to be mulling halting its recent run of consecutive monthly 400K barrel per day output hikes in response to the US and other nations' decision to release oil reserves.