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Oil Edges Higher Near $39 With Dollar Slipping and Storm Brewing


By Alex Longley and Laura Hurst

(Bloomberg) Oil clawed back some losses in New York as Tropical Storm Zeta shut in production in the Gulf of Mexico and the dollar weakened.

Futures rose 0.6% after tumbling below $39 a barrel on Monday. The greenback fell 0.2%, boosting the appeal of commodities priced in the American currency. At the same time, Zeta became the latest storm to threaten U.S. Gulf output.

Prices fell sharply at the start of the week as Libya moved closer to boosting output back to 1 million barrels a day. There’s also a lack of agreement on stimulus in the U.S., clouding the broader market outlook. While Asia remains a bright spot for global oil demand, a renewed surge in virus cases across the U.S. and Europe is raising concerns the fragile recovery in consumption will be derailed.

War-battered Libya is steadily ramping up production

“It’s very difficult to predict what is going to happen with oil and gas right now,” Murray Auchincloss, chief financial officer of BP Plc, said in an interview. “We’ve seen continuous reduction in inventory levels since June, and when those move toward the five-year average I suspect there will be an uptick in price.”

Prices
  • West Texas Intermediate for December delivery rose by 23 cents to $38.79 a barrel as of 8:25 a.m. New York time
  • Brent for December settlement advanced 0.5% to $40.66

Though headline prices were higher on Tuesday, the market’s underlying structure has softened. Brent’s nearest timespread has weakened by 9 cents over the last two sessions, indicating growing concerns about oversupply as Libyan oil returns.

It’s a similar picture in the U.S., with WTI’s equivalent measure closing on Monday at its weakest since early September. Crude volatility has also jumped in recent days, highlighting trader angst.

Other oil-market news:
  • BP narrowly avoided a third-quarter loss, but warned there are many challenges ahead as the pace of recovery in oil demand remains uncertain.
  • U.S. crude inventories rose by 1.5 million barrels last week, while gasoline stockpiles declined by 587,000 barrels, according to a Bloomberg survey before government data on Wednesday.
  • The U.S. sanctioned Iran’s minister of petroleum and some related entities as tensions between the two nations continue to rise in the days before the American presidential election.


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