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Crude oil prices drop, COVID-19 cases hit 38 million

Brent oil futures prices lost 0.2 to trade at $42.35 and West Texas Intermediate (WTI ) fell 0.27% to trade at $40.09.

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Crude oil prices dropped momentarily on the mid-week trading session in London. The price fall is coming on the macro that shows high concerns that energy demand will continue to falter as the number of COVID-19 cases continues to rise, particularly in emerged markets. Recent statistics from Johns Hopkins University data revealed that the number of global cases surged past 38 million as of Oct. 14.

READ: #EndSARS: Flutterwave Chairman says he ordered closure of firm’s payment platform

At the time of writing Brent oil futures prices lost 0.2 to trade at $42.35, and West Texas Intermediate (WTI ) fell 0.27% to trade at $40.09.

It’s key to note that OPEC+ anticipated that in 2021 it would gain by 6.54 million barrels per day to 96.84 million barrels per day in its monthly report released yesterday.

READ: Fitch Ratings: Nigeria clinches a stable ‘B’ Issuer Default Rating

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However, the statistics were 80,000 barrels per day less than its last month forecast as some countries re-impose lockdowns.

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the vital macro helping crude oil to stay at its present levels.

“China’s insatiable demand for all things oil has temporarily buttressed the oil complex after prices jumped on a better than expected import demand from China.

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READ: Nigerian economy since 1980: Are we under a resource curse?

  • But China cannot carry this recovery alone, the US demand needs to kick in.
  • And while the data makes absolute sense, after all, China is the only massive oil-consuming economy that can boast any semblance of a V-shaped economic recovery.
  • Still, the recovery remains all too fragile, as reflected through gnarly news flow, where a resurgence of Covid-19 is now apparent in many major economies.”

READ: China’s Covid-19 vaccine may be ready for general public in November 2020

Bottomline: That said, crude oil prices are still vulnerable as the COVID-19 virus continues to spread like wildfire across the Northern hemisphere.

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading and Financial Market Analysis. Member of the Chartered Financial Analyst Society. You can follow Olumide on Twitter @tokunboadesina or email [email protected]

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Commodities

Crude oil prices drop by over 5%

Crude oil prices dropped more than 5% and falling below the key $40 per barrel support, at the American trading session mid-week

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CRUDE OIL, U.S Shale, Naira under pressure, as crude oil hits $25 per barrel, Oil Price: A dead cat bounce in the making?, Bears tear Crude oil futures into shreds as Brent slumps more than 20%

The slide is attributed to unexpectedly large U.S. crude oil inventories for last week reported by the government, which reinforced concerns about depleting demand for fuel amidst the worsening global outbreak of Covid-19.

At the time of writing, Brent crude traded at $39.44/Barrel down more than 5%.

Why crude oil prices are falling heavily now?

The macros weighing down on oil prices are reports coming from the EIA showing U.S. crude stockpiles gained 4.3 million barrels, against an increase of 1.23 million barrel as anticipated by energy analysts, showing there is soft demand for gasoline in the world’s largest economy.

 

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Commodities

What next for Oil amid rising COVID-19 cases?

The market is feeling pressure amid rising COVID-19 cases in the United States and Europe, and also due to Libyan oil production.

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OPEC+ Alliance, US, Russia, Canada, Mexico reach historic deal to cut 13.4 million bpd, Oil market still uncertain over the OPEC+ deal as prices react positively, 7 oil producing countries most affected by covid-19, see where Nigeria is placed

Crude futures fell 1.9% in New York on Friday and posted their first weekly decline in three, according to Bloomberg. Libya lifted force majeure on its Ras Lanuf and Es Sider ports and oil output will surpass 1 million barrels a day in four weeks, according to the state-run National Oil Corp. A further increment in Libyan oil production will lead to more supply to an oversupplied market that is wrestling with a pandemic-induced sales decline.

This declaration comes in the wake of the ongoing tussles in the North African region, which marked a lasting truce arrangement.

READ: OPEC+ to reduce production cuts in August to 7.7 million barrels a day

Finance Minister, Faraj Boumtari, told Al-Jazeera that in recent years, the regular oil barricades in Libya have cost the nation a sum of US$130 billion in lost incomes.

The truce in Libya is just going to empower more production there and keep it consistent for some time, as the COVID-19 circumstance is not generally improving. Libya’s oil industry has been tormented by battles, as opponent groups have been battling for authority over zones in Libya and its oil terminals and ports since the overturning of Muammar Gaddafi in 2011.

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READ: Libya’s output could destabilise OPEC’s cuts and affect crude prices

In other news, Russia downplayed the likelihood that OPEC+ could expand its present 7.7 million barrels everyday production cuts in one year from now, as per Russian President Vladimir Putin. The remarks could be only jawboning to a market that is urgently looking for consolations that oil production will not increase excessively. However, Russia has in the past been hesitant to keep up its part of the oil production cuts; So, any notice that it is contemplating a slower tightening of the cuts is critical.

Russia had neglected to cut its own oil production to the level it consented to in 2019 and mid-2020. Given how oil production in the United States bounced back two weeks ago, however, it was still down from its March 13 high of 13.1 million bpd. U.S. oil production presently sits at 10.5 million bpd – 2.6 million bpd under those March highs, as indicated by the Energy Information Administration –

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READ: 4 key reasons why Brent crude might slip back to $35 per barrel

China has assumed a critical function in supporting global oil demand as of late, by bringing in its most volumes since May. In contrast, there is a slow recovery in the remainder of Asia and poor refining margins. But how long would China be able to help the fragile global oil market, when demand outside China is weak, with the second wave of COVID-19 contaminations wrecking world economies.

In recent months, China’s unrefined petroleum imports have not fallen under 11 million barrels per day (bpd), with June orders of 12.9 million bpd crushing the past record from May by more than 1.5 million bpd. The market is feeling pressure amid rising COVID-19 cases in the United States and Europe, and also due to Libyan oil production.

READ: Oil supply feared to drop by 3%, as new cases of COVID-19 infections increase

A few U.S. states detailed daily record increments in COVID-19 infections on Thursday, raising worries about future gasoline interest, while France extended curfews as the second wave of the pandemic compasses across Europe.  Oil prices rose last week when the House Speaker, Nancy Pelosi, spoke about the possibility of a stimulus package.

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Commodities

Oil supply feared to drop by 3%, as new cases of COVID-19 infections increase

Growing concern that oil supply could fall by 3% continues as a result of increasing cases of COVID-19 in the US and Europe.

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Crude oil prices slump, as partial lockdowns resume

There is a growing concern that oil supply will fall by 3%, escalating last week’s losses as a result of growing cases of COVID-19 in the United States and Europe.

This has raised worries about the market conditions – the demand and supply of crude oil. The United States reported its highest number of new coronavirus infections in two days – Saturday inclusive, 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 per day (bpd) in four weeks, a quicker ramp-up than many analysts had predicted.

OPEC+, a grouping of producers including the Organization of the Petroleum Exporting Countries (OPEC) and Russia, is also set to increase output by 2 million bpd in January 2021, after cutting production by a record amount earlier this year.

What you should know

Recently, Nairametrics reported that the oil prices had continued to decline as a result of worsening COVID-19 pandemic cases which are threatening to bring more restrictions on movement and consumption and ultimately hit demand for crude products.

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What they are saying

According to Avtar Sandu, Senior Manager of Commodities at Phillip Futures in Singapore, “New barrels of Libyan oil come at a time when the crude oil market had just faced the disappointment from the recently concluded OPEC+ ministerial panel, when the organization made no new policy proposals.”

Last week, Russian President, Vladimir Putin, indicated he may have to agree to extend OPEC+ oil production reductions if that could be beneficial in stabilizing the market.

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