Crude oil prices slid for a second consecutive week amid fears of a severe second wave of COVID-19 that clouded the short-term demand outlook.
The end of the US summer high driving season, lower refining margins, lower Chinese crude oil imports and a stronger dollar have added to the down price momentum.
Brent crude retreated to $39.83 per barrel and dipped below the $40 barrier for the first time since June. WTI crude fell to $37.33 per barrel.
The spread between the two measures narrowed to $2.50 per barrel.
Brent has traded in a narrow band of $4 per barrel for three months, dropping more than $6 per barrel in only two weeks. Despite remaining within this tight range, unprecedented global demand destruction continues to weigh on market fundamentals.
Such bearish sentiment has cemented the market's "contango" structure where prices for immediate delivery remain far below future prices.
This has led to some market players looking at storing crude at sea again.
This trend towards increased onshore and offshore storage has led to concerns about a potential repeat of a “Black April” scenario, when the main US oil storage facility at Cushing in Oklahoma filled up and prices turned negative for the first time.