Oil rose on Tuesday towards $41 a barrel as oil companies shut down some U.S. Gulf of Mexico oil output due to a hurricane, although surging coronavirus infections and rising Libyan supply limited gains.
Companies including BP, Chevron and Equinor ASA evacuated rigs, and so far producers have shut 16%, or 293,656 barrels per day (bpd) of oil output due to Hurricane Zeta.
“Whilst Hurricane Zeta could provide a price relief under the current circumstances, it will be very brief,” said Tamas Varga of oil broker PVM. “The mood is, indeed, souring.”
Oil has declined because of rising coronavirus infections globally and a lack of progress on agreeing a U.S. coronavirus relief package. Still, U.S. House of Representatives Speaker Nancy Pelosi is hopeful a deal can be reached before the Nov. 3 election.
“The rising number of infections, lockdowns and travel restrictions is a serious threat,” said Paola Rodriguez-Masiu of Rystad Energy. “The situation at the moment looks more pessimistic than not.”
Libyan production is expected to reach 1 million bpd in coming weeks, the country’s national oil company said on Friday, complicating efforts by other OPEC members and allies to restrict output.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, are planning to increase production by 2 million bpd from January after record output cuts this year.
But Russian President Vladimir Putin, speaking last Thursday, did not rule out extending the cuts for longer.
Latest Release Oct 27, 2020 Actual 4.577 M Previous 0.584 M
|Oct 27, 2020||16:30||4.577M||0.584M|
|Oct 20, 2020||16:30||0.584M||-1.900M||-5.422M|
|Oct 14, 2020||16:30||-5.422M||-2.300M||0.951M|
|Oct 06, 2020||16:30||0.951M||0.400M||-0.831M|
|Sep 29, 2020||16:30||-0.831M||1.400M||0.691M|
|Sep 22, 2020||16:30||0.691M||-4.000M||-9.517M|
By Yasin Ebrahim
Investing.com - U.S. oil stockpiles rose sharply last week renewing concerns about the strength of demand at a time when storm-related disruptions in the oil-rich U.S. Gulf of Mexico has stifled output.
U.S. crude inventories rose by 4.58 million barrels last week, according to an estimate released Tuesday by the American Petroleum Institute, after a build of 584,000 barrels the previous week.
Crude Oil WTI Futures, the U.S. benchmark for oil, fell 1.37% after settling 2.6% higher at $39.57 a barrel.
The build comes a day ahead of the official government report expected to show weekly U.S. crude supplies fell by 1.2 million barrels last week.
Oil Falls on COVID-19 and Oversupply Fears
Investing.com – Oil prices were down on Wednesday morning in Asia, losing what gains it had recouped in Tuesday’s rally. U.S. lack of demand, surging COVID-19 cases, and Libya’s return to the markets are all pushing prices down.
Oil dropped Tuesday’s gains in Asian trade this morning, with indices heading down over demand worries and oversupply. U.S. stimulus and election uncertainty also added to the market’s woes.
Tuesday’s crude oil supply data from the American Petroleum Institute (API) showed a build of 4.577 million barrels for the week ending Oct. 23, with gasoline inventories also rising. A build of 1.2 million barrels had been expected.
“The higher-than-expected build in U.S. crude stocks prompted fresh selling while concerns over supply disruption from Hurricane Zeta have receded,” general manager of research at Nissan (OTC:NSANY) Securities, Hiroyuki Kikukawa, told Reuters.
The coronavirus pandemic is also weighing heavily on the market, with case numbers rising rapidly across Europe and the U.S., pushing an economic recovery ever further into the future. Johns Hopkins University data has global cases nearing 44 million as of Oct. 28, with 1.17 million deaths.
Libya’s continued restoration of supply is also helping drive the fall in prices, with the North African country expected to reach 1 million barrels per day (bpd) shortly, up from less than 100,000 bpd just a few months ago. This is slightly offset by the arrival of Hurricane Zeta in the Gulf of Mexico, causing rig and refinery shutdowns.
The likely absence of any U.S. COVID-19 relief deal until after the Nov. 13 U.S. elections is yet another headwind for the market, with President Trump unable to broker a deal between his own Republican party-controlled Senate and the Democrat-controlled House of Representatives.
“Rising COVID-19 cases with the lack of a U.S. coronavirus fiscal relief package also dented investors’ risk appetite,” Nissan Securities' Kikukawa said, adding that the gloomy sentiment will keep prices under pressure over the coming days.
Investors now await data from the U.S. Energy Information Administration, due later in the day.