WTI prices extend their pullback to levels near $40

• WTI futures's reversal from $43 extends to $40.
• Coronavirus fears and Lybia's output weigh on oil prices.

Front-month WTI futures have depreciated for the third consecutive day on Friday, returning to the $40 area. A combination of COVID-19 fears and boosting output from Lybia have weighed on prices.

Crude prices drop on concerns about demand

Oil prices have lost about $3 over the last three days after peaking at $43 earlier this week. Investors’ enthusiasm on the announcement that Pfizer’s coronavirus vaccine was 90% effective triggered a 15% rally on the WTI barrel on the first two days of the week.

The oil rally faltered on Wednesday as the surging cases of COVID-19 in Europe and US revived fears about the impact of lockdowns on global demand. Furthermore, the announcement that Lybia has boosted its oil production to 1.2 million barrels per day has added concerns, increasing bearish pressure on prices.

In the US, the Baker Hughes has reported that US oil rigs increased for the eight-consecutive week, which has failed to improve investors’ sentiment. The total count of active oil rigs increased by 10 to 236 on the week of November 6, which has contributed to increase fears about an excess of supply.

Technical levels to watch