Oil loses ground as Covid-19 cases rise

Picture: REUTERS
Picture: REUTERS

Oil prices slipped on Tuesday as worries about soaring Covid-19 cases, rapidly rising Libyan supply and US election jitters outweighed growing hopes that producers would hold back on planned production increases.

US West Texas Intermediate (WTI) crude futures slipped 6c, or 0.2%, to $36.75 a barrel at 1.59am GMT, while Brent crude futures fell 15c, or 0.4%, to $38.82.

Italy is the latest country in Europe to tighten Covid-19 restrictions, including limiting travel between the worst-hit regions and imposing a nightly curfew, which will limit fuel demand.

“Demand has hit a speed hump as the resurgence in coronavirus cases around the world has resulted in new lockdowns,” ANZ Research said in a note.

Benchmark prices, down sharply over the past week, had a brief reprieve on Monday, rising nearly 3% after Russia’s oil minister held talks with domestic oil companies to delay crude output increases planned for January.

Russian energy minister Alexander Novak met top managers of Russian oil companies on Monday to discuss a possible extension of oil output restrictions into 2021, sources said.

“The Kremlin has effectively stopped two gaps with one bush — defend oil prices and effectively intervene in the rouble’s precipitous decline,” said Stephen Innes, chief market strategist at Axi.

The Organisation of the Petroleum Exporting Countries (Opec) and allies including Russia, a grouping called Opec+, slashed oil output from May to support prices and tapered the cut to 7.7-million barrels a day in August. They are due to pare that further by 2-million barrels a day in January.

But with soaring cases of Covid-19 in Europe and the US and the swift return of oil supply from Libya after an eight-month blockade, Saudi Arabia and Russia are in favour of delaying the output increase in January.

Opec holds its next full meeting on November 30.

In another bearish sign, seven analysts polled by Reuters estimated US crude stocks were likely to have risen by about 2-million barrels in the week to October 30. US inventory data is due from the American Petroleum Institute on Tuesday and the Energy Information Administration on Wednesday.


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