Oil eases as new lockdowns raise concern about fuel demand
Oct 16 2020
Oil prices were steady in early trade on Tuesday, sitting on losses of almost 3% from the previous session after supplies began to resume in Norway and the U.S. Gulf of Mexico and Libya resumed production at its largest oilfield.
"The outlook in Asia could be the reason OPEC+ alliance remains confident the market can withstand another 2 million barrels per day in the market", ANZ Research said in a note. Gasoline inventories declined by 1.6 million barrels while distillate fuel inventories decreased by 7.2 million barrels.
U.S. West Texas Intermediate (WTI) crude futures picked up 4 cents, or 0.1%, to $41.08 a barrel at 0032 GMT, while Brent crude futures rose 5 cents, or 0.1% to $43.37 a barrel.
Rising Libyan output will pose a challenge to OPEC+ - a group comprising OPEC and allies including Russian Federation - and its efforts to curb supply to support prices. "Oil demand is projected to be in line with these positive developments and trends."The bloc produced 24.11 million b/d in September, the report found, with the third quarter (Q3) average at 23.8 million b/d, or 600,000 b/d lower than demand for its crude, indicating room for OPEC, and its partners to maintain their relaxed quotas going into 2021".
"The (EIA) report halted the (price) slide, which was threatening to turn into an avalanche earlier this morning", said Robert Yawger, director of energy futures at Mizuho in NY.
In the United States, Hurricane Delta, which dealt the greatest blow to USA offshore Gulf of Mexico energy production in 15 years, was downgraded to a post-tropical cyclone by Sunday.
The Louisiana Offshore Oil Port (LOOP) on Monday said it has resumed operations at its offshore Marine Terminal and there are no interruptions in deliveries at the Clovelly Hub. But both fell on Friday after Norwegian oil companies struck a deal with labour union officials to end a strike that had threatened to cut the country's oil and gas output by close to 25%.
The return of supply comes as resurgent COVID-19 infections in the U.S. Midwest and Europe raise worries about fuel demand growth, posing a challenge for the Organization of Petroleum Exporting Countries and its allies, together called OPEC+.
"Given that the hurricane season in the US has just started, there's potential for that to keep prices firm".