Oil is one of the major commodities in the world trading market. The price and stock of this commodity always become attention. On the other side, its fluctuating situation can be influenced by several factors that happened. The last one is a storm.

You cannot deny that natural disasters such as storms will for sure influence the price. However, besides that aspect, this commodity will be influenced by the stocks available too. It was what happened lately where the stocks are so much.

This abundant number will have an impact on its price. These goods are known to fall with the deepest weekly weakness since April 2020 at the end of this summer. Approximately, what factors influence it the most? Here are the answers.

Too Much Oil Supply

Concern about the excess supply of oil produced by OPEC countries is the main thing in the decline of this commodity. Based on Bloomberg data on Saturday (12/9/2020) at 10.12 WIB, the price of West Texas Intermediate (WTI) oil for the October delivery contract fell by 3 cents.

It means that the price is US $ 37.33 per barrel on the New York Merchantile Exchange. Meanwhile, the price of Brent item in the November 2020 delivery contract is said to have experienced a bigger decline. This commodity fell 23 cents to US $ 39.83 per barrel. 

Market participants are concerned about indications that Saudi Arabia has raised its crude oil production quotas from the OPEC deal allowed. They have been doing it continuously since July 2020. On the other hand, the supply increased again last week for the first time since mid-July.

Head of OTC Energy Trading at LPS Futures said that these commodities were unable to strengthen this week because they were pressured by some negative sentiments. Concerns about falling demand arise as people work from home. They don't travel as much as they did before the pandemic.

OPEC+ Oil Supply Uncertainty

World oil prices are likely to become increasingly uncertain. Many experts predict that this commodity will continue to show a downward trend. It is because there is no certainty regarding the supply that will be distributed by OPEC+. 

However, producers are expected to continue to increase production despite financial tightening. President of Strategic Energy & Economic Research Michael Lynch said adding to the supply of this commodity in the US was a reminder that the price-lifting summer was over.

The summer which was the travel season was over. The level of existing riders was not that high. U.S. Senior Investment Strategist Bank Wealth Management Rob Haworth assessed that as long as the economy has not opened perfectly, hopes for strengthening cannot be seen.

A unique way of predicting an industry is how fast it can open up. The thing is, companies have to survive until that time happens and brings an effect. Unfortunately, no one knows for sure when that time will be in the market.

The threat of the Corona Pandemic still exists

Many parties also agree that it will be increasingly difficult for these commodities to experience an increase amid the corona pandemic in this year. This virus has caused many countries to reduce their economic activity so that many people move indoors. 

This low consumption makes the supply of crude oil very large in the world. The fact that happens and is faced by investors is that demand is much reduced. On the other hand, the supply of this good continues to increase.

Forbes wrote that the global economy was teetering toward normalcy. Oil prices have not shown any strengthening. Both Brent and WTI continued to be below the US $ 50 per barrel in the third quarter of this year. The price was the worst in April at the negative levels.