Falling oil prices

Falling oil prices

Oil prices fell in early trading on Thursday, adding to the heavy losses the day before, after an increase in US gasoline inventories pointed to a weaker fuel demand outlook due to rising coronavirus cases in North America and Europe.

 

Brent crude oil futures were down 22 cents, or 0.5%, to $ 41.51 a barrel at 03:28 GMT after declining 3.3% on Wednesday.

 

WTI crude oil futures fell 26 cents, or 0.7%, to $ 39.77 a barrel, after falling 4% on Wednesday.

 

In the week to October 16, US gasoline inventories rose 1.9 million barrels, the Energy Information Administration (EIA) said, compared with expectations for a 1.8 million barrels fall.

 

Total shipments, a measure of demand, averaged 18.3 million barrels per day in the four weeks to October 16, according to the EIA, down 13% from the same period a year earlier.

 

"The latest EIA report showed an unexpected increase in gasoline inventories, which came in parallel with a reduction in gasoline production due to disruptions in refinery operations due to Hurricane Delta. Thus, it is understood that the demand for gasoline is quite low," said Lachlan Shaw. head of the commodity research department at the National Bank of Australia.

 

With new daily Covid-19 infections hitting records in several U.S. states and Europe, China's new restrictions on outbound travel to help stem the spread of the disease foreshadow disaster for fuel demand.

 

The outlook is deteriorating as hopes that US lawmakers will reach an agreement with the White House on an economic stimulus package dimmed late Wednesday after President Donald Trump accused Democrats of delaying a compromise deal.

 

“The resurgence of coronavirus cases is forcing American motorists to slow down increasingly. This makes negotiations on the US stimulus package even more important, ”ANZ Research said in a statement.

 

NAB's Shaw said that even if the Covid-19 relief package is approved, it is likely to lead to a temporary increase in oil prices.

 

“This could boost the tone of demand for a week or two, but as the spread of the coronavirus accelerates, there is a headwind there,” he said.

 

In addition to supply concerns, Libyan oil exports accelerated rapidly in October, as loading operations resumed following the easing of the blockade by eastern forces.

 

"The resumption of departure from Libya comes at a time when most countries in the world continue to grapple with the drop in oil demand as a result of COVID-19," said a note to clients of intelligence company Kpler.

 

In Libya, production has recovered to about 500,000 barrels per day, and the government in Tripoli expects that figure to double by the end of the year.

22 октября, 2020

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