Oil Extends Decline With Demand Recovery Concerns Rising
September 30, 2020 EnergyNow Media
By Elizabeth Low and Alex Longley
(Bloomberg) Oil extended its decline below $39 a barrel in New York, heading for the first monthly loss since April, as the world’s biggest trading houses signaled a meaningful recovery in demand is some way off.Global oil consumption may rebound from its virus-driven collapse in about 18 months, according to the head of Mercuria Energy Group, while Gunvor Group Ltd. and hedge-fund manager Pierre Andurand predict a recovery may be closer to two years. Meanwhile, the American Petroleum Institute reported a weekly drop in U.S. crude stockpiles, while Cushing supplies and gasoline inventories rose, people familiar said. Government figures are due later on Wednesday.
Oil sank below $40 on Tuesday as a surge in coronavirus cases across major economies stoked demand concerns. The U.S. benchmark crude also ran into technical weakness, sliding below its 100-day moving average for the first time since June. On the supply side, the market faces rising output from Libya and the rest of OPEC+, with Russia the latest member likely to exceed its quota.
“Concerns about stagnating demand and the return of Libyan exports continue to put pressure on oil prices,” said Norbert Ruecker, head of economics at Julius Baer. “Given the bearish mood, short-covering has become a risk to watch.”
West Texas Intermediate for November delivery fell 1% to $38.89 a barrel as of 10:22 a.m. London time
Futures are down almost 9% this month
Brent for November settlement, which expires Wednesday, retreated 1.3% to $40.50
Total U.S. crude stockpiles dropped by 831,000 barrels last week, while inventories at the storage hub of Cushing expanded by 1.61 million barrels, according to the API. Gasoline supplies rose by 1.62 million barrels, which would be the first increase in eight weeks if confirmed by the Energy Information Administration on Wednesday.
Other oil-market news
Despite demand concerns, there are positive signs for transport use in Asia. Gasoline prices have surged above those for diesel in recent days as personal vehicle usage jumps in the region.
Venezuela’s dwindling oil exports were dealt another blow as one of India’s top refiners secured millions of barrels of Canadian crude on concern that the U.S. is poised to step up sanctions against Caracas.
Royal Dutch Shell Plc will cut as many as 9,000 jobs as Covid-19 precipitates a companywide restructuring into low-carbon energy.
Oil workers from a Norwegian union have gone on strike after wage talks failed early Wednesday, with production at the giant Johan Sverdrup field at risk of shutting down.
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