Economy

Oil prices slide amid coronavirus concerns

Oil prices slide amid coronavirus concerns”

Oil prices have climbed this week despite concerns about renewed lockdowns hitting fuel demand as COVID-19 infections surge in Europe.

Brent crude futures LCOc1 for December fell by 6 cents to $42.39 a barrel by 0953 GMT while U.S. West Texas Intermediate CLc1 futures were down 5 cents at $40.15. On Monday, both benchmarks fell almost 3%.

U.S. crude oil inventories decreased by 3.8 million barrels during the week ending October 9, the U.S. Energy Information Administration reported on Thursday.

"We find that China's record haul of crude growth is poised to cease as independent refineries have almost fully utilized their state-issued import quotas and companies struggle with extremely high crude inventories".

But under a "delayed recovery scenario", it said the energy demand recovery is pushed back to 2025.

OPEC+ had 100% compliance with a pact to cut oil supply in September was seen at 102%, two OPEC+ sources told Reuters.

More news: Ontario reports 805 new cases of COVID-19

OPEC+, a grouping of the Organization of the Petroleum Exporting Countries and allied producers including Russian Federation, fear a prolonged second wave of the pandemic and a jump in Libyan output could push the oil market into surplus next year.

Asian spot prices for LNG rose to their highest in more than 11 months last week, underpinned by expectations that an anticipated cold winter will stoke demand for the fuel used in heating.

On the supply side, workers have been returning to U.S. Gulf of Mexico platforms after Hurricane Delta and Norwegian workers to offshore rigs after ending a strike.

The IEA said the forecast for a decline in demand by 8.4 million barrels per day (bpd) for this year to 91.7 million bpd is relevant only if OPEC+ fully complies with the terms of the deal to reduce production, and world reserves decrease by 4 million barrels per day in the fourth quarter. The growth forecast is 80,000 bpd less than expected a month ago.

"For prices to rise further, we think elevated spare production capacity among OPEC+ needs to be reduced. Truly, those wishing to bring about a tighter oil market are looking at a moving target". "The group can react easily to any large production disruption by using its spare production capacity to ramp up production in case prices spike", UBS analysts said in a note.

U.S. crude oil inventories were seen falling last week, while distillate stockpiles likely declined for a fourth week, a preliminary Reuters poll showed on Tuesday.



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