Oil futures ended lower on Monday, undercut by continued demand worries, as the Organization of the Petroleum Exporting Countries further reduced its outlook for demand growth, as well as the potential for more oil from Libya.
West Texas Intermediate crude for October delivery fell 9 cents, or 0.2%, to end at $37.24 a barrel on the New York Mercantile Exchange, while the global benchmark, November Brent declined by 22 cents, or nearly 0.6%, at $39.61 a barrel on ICE Futures Europe.
A storm in the Gulf of Mexico, however, has prompted shutdowns among energy platforms and rigs in the region, limiting losses for oil and lifting prices for natural gas reported MarketWatch.
“Losing the psychological 40-dollar mark makes traders wonder how deep the oil price decline [may] be during the second wave of the pandemic,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy, in daily market commentary.
Demand is at much better levels since the first wave of the pandemic, but it has “not recovered to levels the market hoped for, and forecast are pretty flat for the coming months,” he said. The COVID-19 pandemic is “not past us yet and new infection cases continue to mushroom around the world, which in turn affects how key oil-consuming markets work.”
And while “demand sweating to keep up, supply is accelerating,” said Tonhaugen.
The comeback of some of curtailed production from the Organization of the Petroleum Exporting Countries and their allies is starting to be “visible in the market,” with Middle Eastern producers cutting prices, onshore storages filling up and offshore storage in demand, he said.
OPEC, in its monthly report on Monday, said it now expects 2020 oil demand to contract by 9.5 million barrels a day to 90.2 million barrels a day, versus its previous call for a 9.1 million barrel-a-day fall. It also lowered its outlook for demand growth in 2021, citing the lingering effects of the coronavirus.
Also weighing on prices, analysts said, was a report by Reuters that Libyan commander Khalifa Haftar plans to halt a blockade of the oil-exporting nation’s ports.
Source: MarketWatch
