Markets

Oil prices steady after falling amid return of supply

Previous session saw losses of nearly 3% and IEA forecasts 5% fall in global energy demand

Photograph: iStock

Tue Oct 13 2020 - 07:05

Oil prices were steady on Tuesday, sitting on losses of nearly 3 per cent from the previous session as supplies began to resume in Norway, the US Gulf of Mexico and Libya, while the IEA forecast a 5 per cent fall in global energy demand in 2020.

US West Texas Intermediate (WTI) crude futures inched up 4 cents to $39.47 a barrel at 0448 GMT, while Brent crude futures also rose 4 cents to $41.76 a barrel.

Oil prices are under pressure from concerns about the return of supplies, while resurgent Covid-19 infections in the US Midwest and Europe raise worries about fuel demand growth, posing a challenge for the Organisation of Petroleum Exporting Countries and its allies, together called Opec+.

With workers returning to US Gulf of Mexico platforms after Hurricane Delta and Norwegian workers returning to rigs after ending a strike, all eyes were on Libya, a member of the Organisation of the Petroleum Exporting Countries (Opec), which on Sunday lifted force majeure at the Sharara oilfield.

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Libya’s total output on Monday was at 355,000 bpd. The Sharara field was producing 300,000 bpd of oil before the blockade.

"That would effectively add 0.3 per cent of global oil supply in a very short time frame," Commonwealth Bank commodities analyst Vivek Dhar said in a note.

OPEc+ has curbed supply to help shore up oil prices amid coronavirus pandemic, with cuts of 7.7 million barrels per day due to hold through December. The producers’ market monitoring panel is due to meet next Monday.

“It won’t be a huge surprise if finally the alliance decides to address the worsening situation and amend its action,” Rystad Energy’s head of oil markets, Bjornar Tonhaugen, said in a note.

The International Energy Agency (IEA), which advises Western governments on energy policy, said in its newly released annual World Energy Outlook that in its central scenario, a vaccine and therapeutics could mean the global economy rebounds in 2021 and energy demand recovers by 2023.

But under a “delayed recovery scenario”, the timeline is pushed back two years, it said.

Stoking worries about fuel demand, curbs were being tightened in Britain and the Czech Republic to battle rising cases of Covid-19, while French Prime Minister Jean Castex said he could not rule out local lockdowns. – Reuters

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