(Bloomberg) Oil reversed an earlier decline following a weaker dollar and a broader rally in markets. The U.S. currency hit a session low, making commodities priced in the greenback more attractive, and European equities rallied the most in two weeks. The oil market, however, still faces an uncertain outlook with an executive at trading giant Vitol Group saying prices have little room to gain in the fourth quarter because the demand recovery is slowing amid new coronavirus restrictions. Additional supply from Libya is adding to those worries. After a blockade was partially lifted last week, output in the OPEC member has almost tripled to 250,000 barrels a day, according to people familiar with the matter. It’s set to expand further as ships load crude from storage, allowing fields to pump more, the said.
Oil has been largely stuck near $40 a barrel this month with signs that a resurgence of the virus could lead to more lockdown measures. The recovery will be long and gradual, Russian Energy Minister Alexander Novak said on Sunday, estimating global demand this year will drop by as much as 10% from a year earlier.
“First the rally in stocks and now the weaker dollar has led the oil market to move higher,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Commodities in general were slow to act given the fundamental headwinds.”
Prices
West Texas Intermediate for November delivery rose 0.5% to $40.46 a barrel as of 12:04 p.m. London time, after dropping 2.1% last week
Brent for November settlement gained 0.4% to $42.09
Vitol’s executive committee member Chris Bake also commented on the global refining market, saying it’s “incredibly squeezed” and contending with large stockpiles, a sentiment echoed by Socar Trading CEO Mariam Almaszade. Oil demand has become more “uncertain,” Bake said on a conference call hosted by Dubai consultant Gulf Intelligence.
Other oil-market news
The world’s first shipment of blue ammonia is on its way from Saudi Arabia to Japan, where it will be used in power stations to produce electricity without carbon emissions.
Libya Sirte Oil Co., which operates the country’s eastern Brega port and fields feeding it, has reached a normal level of production after restarting last week, according to a person with knowledge of the situation.
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