Oil prices steady but rising infections and oil supply weigh

by Psu Connect
Date: 20-10-20

U.S. West Texas Intermediate (WTI) crude futures edged up 1 cent to $40.84 a barrel, having earlier dropped to $40.48. COVID-19 cases topped 40 million on Monday, according to a Reuters tally, with a growing second wave in Europe and North America sparking new clampdowns.

Melbourne/Singapore: Oil prices were little changed on Tuesday, steadying after three days of declines due to worries that a resurgence of coronavirus cases globally is stifling a recovery in fuel demand, while growing output from Libya adds to plentiful supply. Brent crude futures were trading down 4 cents, or 0.1%, at $42.58 a barrel by 0635 GMT, recovering ground after falling to as low as $42.19 earlier in the session.

U.S. West Texas Intermediate (WTI) crude futures edged up 1 cent to $40.84 a barrel, having earlier dropped to $40.48. COVID-19 cases topped 40 million on Monday, according to a Reuters tally, with a growing second wave in Europe and North America sparking new clampdowns.

“It’s clouds of gloom over the oil market again,” said Vandana Hari, energy analyst at Vanda Insights. “The demand picture was already weak; the supply sentiment took a hit on Monday as Saudi Arabia and Russia steered clear of signaling that they would reconsider the planned OPEC+ January output boost.”

A meeting on Monday of a ministerial panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together called OPEC+, pledged to support the oil market as concerns grow over soaring infections. For now, OPEC+ is sticking with a deal to curb output by 7.7 million barrels per day (bpd) through December, and then shaving the cuts back to 5.8 million bpd in January.

However, three sources from producing countries said the planned output increase from January could be reversed if necessary. “We don’t think oil markets are in a position to absorb the around 2% of global supply that OPEC+ are expected to restart from 1 January, 2021,” Commonwealth Bank commodities analyst Vivek Dhar said in a note. (Reuters)