Oil steadies amid subdued sentiment

Tokyo — Oil prices eked out small gains on Tuesday after recent sharp losses, but sentiment remained subdued as a surge in global coronavirus cases hit prospects for crude demand while supply is rising.

Brent crude was up 19c, or 0.5%, at $40.65 a barrel by 3.24am GMT. US oil gained 15c, or 0.4%, at $38.71 a barrel. Both contracts fell more than 3% on Monday.

A lack of progress on agreeing a US coronavirus relief package added to market gloom, though US House of Representatives speaker Nancy Pelosi said on Monday she hoped a deal can be reached before the November 3 elections.

A wave of coronavirus infections sweeping across the US, Russia, France and many other countries has undermined the global economic outlook, with record numbers of new cases forcing some countries to impose fresh restrictions as winter looms.

“We think demand from this point onwards is really going to struggle to grow. Covid-19 restrictions are all part of that,” said Commonwealth Bank of Australia (CBA) commodities analyst Vivek Dhar.

CBA expects US oil to average $38 and Brent to average $41 in the fourth quarter this year.

Prices got some support from a potential drop in US production as oil companies began shutting offshore rigs with the approach of a hurricane in the Gulf of Mexico.

Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said on Monday the worst is over for the crude market. But his comment contradicted an earlier remark from the secretary-general of the Organisation of the Petroleum Exporting Countries (Opec), who said any oil market recovery may take longer than hoped as coronavirus infections rise around the world.

Meanwhile, Libyan production is expected to reach 1-million barrels a day in the coming weeks, the country’s national oil company said on Friday, a quicker return than many analysts had predicted. That is likely to complicate efforts by Opec to restrict output to offset weak demand.

Opec is planning to increase production by 2-million barrels  from the start of 2021 after record output cuts earlier this year.

An analyst survey by Reuters ahead of data from the American Petroleum Institute on Tuesday and the US energy information administration on Wednesday estimated that US crude stocks rose in the week to October 23, while petrol and distillate inventories fell.

Reuters