Oil drops on rising virus cases, increasing Libyan output

Oil prices fell on Monday, extending last week’s losses, as increasing coronavirus cases in the United States and Europe raised worries about energy demand, while Libya’s fast growing production also weighed on prices. Brent was down 80 cents, or 1.9%, at $40.97 by 1121 GMT. U.S. West Texas Intermediate (WTI) dropped 82 cents, or 2.1%, to $39.03. Both contracts fell almost 2.5% last week.

The United States reported its highest number yet of new coronavirus infections in two days through Saturday, while in France new cases hit a record of more than 50,000 on Sunday. Italy and Spain imposed fresh restrictions to curb the virus. The rising number of cases “not only highlight the risks posed by immediate transport restrictions, but also dampen long-term demand expectations,” said Commerzbank analyst Eugen Weinberg.

On the supply side, Libya’s National Oil Corp (NOC) said it had lifted force majeure on the El-Feel oilfield. NOC said on Friday Libyan production would reach 1 million barrels per day (bpd) in coming weeks, a quicker ramp-up than many analysts had predicted.

OPEC+, the group of producers including the Organization of the Petroleum Exporting Countries and Russia, is also set to increase output by 2 million bpd in January 2021 after cutting production by a record amount earlier this year. Russian President Vladimir Putin indicated last week he may agree to extending OPEC+ oil production reductions.

In the United States, energy companies increased their rig count by five to take the total to 287 in the week to Oct. 23, the most since May, energy services firm Baker Hughes Co BKR.N said. The rig count is an indicator of future supply.

Oil drops on rising virus cases, increasing Libyan output, Reuters, Oct 26