- Oil prices drop for fourth day as COVID-19 second wave worries intensify.
- Brent crude futures fell 30 cents, or 0.7%, to $42.32 a barrel by 0149 GMT, after falling 31 cents.
- U.S. West Texas Intermediate (WTI) crude futures slid 26 cents, or 0.6%, to $40.57 a barrel, after losing 5 cents.
Oil prices slipped for a fourth straight day on Tuesday on worries about a resurgence of coronavirus cases globally stifling a promising recovery in fuel demand, while growing output from Libya adds to plentiful supply in the market, reports ET Energy World.
Fuel prices tumble amid second wave
Brent crude futures fell 30 cents, or 0.7%, to $42.32 a barrel by 0149 GMT, after falling 31 cents on Monday.
U.S. West Texas Intermediate (WTI) crude futures slid 26 cents, or 0.6%, to $40.57 a barrel, after losing 5 cents on Monday.
COVID-19 cases topped 40 million on Monday, according to a Reuters tally, with a growing second wave in Europe and North America having sparked new clampdowns.
“Since April we have seen a miraculous recovery in oil demand – which is now at about 92% of pre-pandemic levels, but it’s too early to declare an end to the COVID-19 oil demand destruction era,” said Rystad Energy oil markets analyst Louise Dickson.
Market concern grow over soaring infections
A meeting on Monday of a ministerial panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together called OPEC+, pledged to support the oil market as concerns grow over soaring infections.
For now OPEC+ is sticking with a deal to curb output by 7.7 million barrels per day (bpd) through December, and then shaving the cuts back to 5.7 million bpd in January.
Three sources from producing countries said the planned output increase from January could be reversed if necessary.
“We don’t think oil markets are in a position to absorb the around 2% of global supply that OPEC+ are expected to restart from 1 January, 2021,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.
Oversupply concerns
He said rising output from Libya, which is operating outside the OPEC+ pact, was adding to oversupply concerns.
Libya is rapidly ramping up production after armed conflict shut almost all of the country’s output in January. Output from its biggest field, Sharara, which reopened on Oct. 11, is now at around 150,000 bpd, or about half its capacity, two industry sources told Reuters.
Meanwhile traders will be watching for crude and product inventory data from the American Petroleum Institute on Oct. 20. Analysts expect U.S. crude oil and distillate stockpiles likely fell in the latest week, according to a Reuters poll.
Oil slump in third quarter
Australia-listed Oil Search Ltd posted on Tuesday a 47.7% slump in third-quarter revenue, missing analysts’ estimates, as the coronavirus outbreak kept crude prices subdued and hurt prices of its key liquefied natural gas (LNG) product.
The company, however, said it was seeing a return in appetite for oil products, with oil prices recovering from lows hit in the second-quarter which is expected to increase LNG contract prices going forward.
For the three months ended Sept. 30, average sales prices Oil Search received for its liquefied natural gas were 55% lower than the same period last year.
H1 profit compromised
Plunging commodity prices have whacked Oil Search’s first-half profit and driven its share price lower by nearly 60% this year. To tackle this, it has been trying to keep a tight leash on costs through various measures, including layoffs.
Posting its third straight quarterly drop, the Papua New Guinea-focused oil and gas explorer said third-quarter revenue came in at $189 million, down from $361.1 million a year earlier and much lower than brokerage RBC’s estimate of $261 million.
Helped by higher output at the PNG LNG project, production in the quarter rose about 7% to 7.30 million barrels of oil equivalent (mmboe). The company added that it will lay out long-term plans for the business as a result of a “wide-ranging” strategic review on Nov. 19.
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Source: ET Energy World
