Oil drops below $ 40 due to uncertain demand as supply in Libya increases

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(Bloomberg) – Oil fell below $ 40 a barrel in New York City, with Vitol Group seeing uncertain demand keeping prices under control, while Libyan production surged after the blockade on energy facilities was partially lifted.

Prices have little room for maneuver in the fourth quarter as the recovery in global demand slows due to new economic restrictions linked to coronaviruses, said Chris Bake, member of Vitol’s executive committee. Libya’s production nearly tripled to 250,000 barrels per day, with production set to rise further as ships dock and load crude from storage tanks, allowing fields to pump more, according to people familiar with the field. topic.





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Oil stayed close to $ 40 on uncertain demand outlook


Oil calmed down this month after briefly crossing $ 43 in late August, signs that a resurgence of the epidemic could lead to more lockdowns. The recovery is expected to be long and gradual, Russian Energy Minister Alexander Novak said on Sunday, estimating that global oil demand in 2020 will decline by 10% from a year earlier.

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See also: Oil market in a slime of mixed on-demand messages, glut

“The market structure is still bearish at the moment,” said Howie Lee, economist at Oversea-Chinese Banking Corp. in Singapore. The major economies considering reimposing travel restrictions have been the main catalyst for lower oil prices, he added.

Prices
West Texas Intermediate for November delivery fell 0.9% to $ 39.88 a barrel on the New York Mercantile Exchange at 7:58 a.m. London time, after falling 2.1% last week Shanghai International Energy Exchange crude fell 1.7% to 262.2 yuan a barrel after rising 1.9% on Friday

Brent’s three-month lead time was $ 1.25 a barrel in contango – where quick contracts are cheaper than newer contracts – down from $ 1.37 a week earlier. The change in the market structure indicates that while there are still concerns about oversupply, it has eased slightly.

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Global oil refining is “incredibly pressed” and the market is grappling with large inventories, Vitol’s Bake said on a conference call hosted by Dubai consultant Gulf Intelligence. Demand is more uncertain, he added.

OPEC + began to increase supply in the market in August and a gain in production from Libya – which is exempt from cuts – could put additional pressure on the fragile recovery. National Oil Corp. is assessing security at four other Libyan ports, including Zawiya, which handles crude from the country’s largest field, to see if it is safe to restart.

Other news from the oil market
The world’s first shipment of blue ammonia is on its way from Saudi Arabia to Japan, where it will be used in power plants to generate carbon-free electricity. The Ministry of Energy and Minerals of Oman will award a contract to Maha Energy AB for the exploration of Block 70, which includes the Mafraq heavy undeveloped oil field.

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Video: Sankey: Oil industry must shrink and cope with the global transition to weaker demand (CNBC)

Sankey: Oil industry needs to shrink and face the global shift to weaker demand

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