The price of oil has dropped another 4% with Europe bracing itself for further restrictions as the bloc prepares to impose new lockdowns in order to slow the spread of coronavirus, capping off a rough year for the industry.
Oil production
2020 has already seen the oil and gas industry in dire straights as demand for oil has slumped owing to reduced travel.
The crisis has shown how unsustainable the fossil fuel industry is, and many country's post-pandemic recoveries will see a shift in favour of more renewable models, which will put further strain on the sector and causing continued price drops.
Other companies, such as Suncor, have resorted to selling their shares in oilfields in order to cut losses owing to the pandemic.
Some companies have gone under entirely, resulting in them being picked up by other oil titans in order to save their businesses.
Strikes have also caused disturbances with several prominent industry players having to shut down fields until the situations have been resolved.
The price of Brent crude oil dropped by 3.8% to $36.45 a barrel while West Texas Intermediate (WTI) dropped 4.4% to $34.21 per barrel.
Both saw peak drops of 5.8% and 6.%, respectively during 2020, causing their lowest trading levels since May.
The effects of the pandmic on the oil and gas indsutry were felt immediately, with the price of oil dropping below zero for the first time in history.
Countries across Europe are set to impose further lockdown restrictions in order to stem the spread of the virus, as cases have accelerated over the past few months.
Coronavirus cases have recently spiked to above 46 million, with over 1.2 million confirmed deaths.
Global oil trading companies are expecting another drop in price, but estimates as to the full effect differ. Vitol predicts the industry will produce around 96 million barrels per day in line with winter demands, whereas Trafigura expects it to drop to 92 million barrels per day.
Michael McCarthy, the chief market strategist at CMC Markets in Sydney, told Reuters: “A lot of traders are now looking at the U.S. and their rising infection rates and wondering if Europe is providing the model for what will happen in the U.S. in the coming weeks."
There are also concerns the upcoming US election will add further turbulence to the sector.
The uncertain outcome has caused investor trepidation in global markets.
McCarthy said: “The most immediate concern for markets is that political paralysis will delay or diminish a fiscal response to the deteriorating coronavirus situation."
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