Oil set for second monthly decline

London — Global oil prices moved in and out of negative territory on Friday but remained on course for a second monthly fall as rising Covid-19 cases in Europe and the US heighten concerns over fuel consumption.

Brent crude was up three US cents at $37.68 a barrel by 8.31am GMT after touching a five-month low in the previous session. The December Brent contract expires on Friday and the January contract was trading broadly flat.

US West Texas Intermediate (WTI) crude rose 8c to $36.25 after dipping to its lowest since June on Thursday. It is on track for a 10% monthly decline while Brent heads for an 8% drop.

Prices had swung between parity and a more than 2% decline during Friday’s session, with the market “anxious” about renewed lockdowns in Europe and the US election next week, a Singapore-based oil trader said.

The US dollar, measured against a basket of currencies, has also strengthened this week, making dollar-denominated oil more expensive for holders of other currencies.

Opec and allies including Russia, a group known as Opec+, had planned to raise output by two-million barrels per day (bpd) in January.

However, top producers Saudi Arabia and Russia are in favour of maintaining the group’s current output reduction of about 7.7-million bpd into 2021 in the face of lockdowns in Europe and rising Libyan oil output.

Opec+ is scheduled to hold a policy meeting from November 30 to December 1.

Governments across Europe imposed fresh restrictions this week to curb the spread of the coronvirus, with Germany saying its economy will not fully recover before 2022.

While that has reduced mobility and fuel consumption within Europe, demand in the US is holding up for now, RBC Capital’s Mike Tran said in a note. 

Reuters