Oil falls further as rising cases fuel demand worries

Tokyo — Oil extended last week’s losses on Monday, falling almost 2% as a surge in Covid-19 infections in the US and Europe prompted concern over crude demand, while the prospect of increased supply also hit sentiment.

Brent crude was down 70c, or 1.7%, at $41.07 by 3.53am GMT. US West Texas Intermediate (WTI) dropped 69c, or 1.7%, to $39.16, having fallen more than a dollar shortly after the start of trading.

Brent fell 2.7% last week and WTI dropped 2.5%.

The US reported its highest number yet of new coronavirus infections in two days to Saturday, while in France new cases hit a record of more than 50,000 on Sunday, underlining the severity of the outbreak.

On the supply side, Libya’s National Oil Corp on Friday ended its force majeure on exports from two key ports and said production would reach 1-million barrels a day in four weeks, a quicker ramp-up than many analysts had predicted.

“The recent surge in Covid-19 cases and further movement restrictions across parts of Europe is weighing on sentiment, with concern over what this all means for demand,” ING Economics said in a note.

“Not helping, is the fact that Libya appears to be returning supply to the market quicker than expected,” ING said.

Opec+, a grouping of producers including Opec and Russia, is also set to increase output by 2-million barrels a day in January 2021 after cutting production by a record amount earlier in 2020.

Russian President Vladimir Putin indicated last week he may agree to extending Opec+ oil production reductions.

In the US, energy companies increased their rig count by five to take the total to 287 in the week to October 23, the most since May, energy services firm Baker Hughes said. The rig count is an indicator of future supply.

Still, investors increased their net long positions in US crude futures and options during the week to October 20, the US Commodity Futures Trading Commision said on Friday.

Reuters