Oil Set for Biggest Monthly Drop Since March as Virus Curbs Grow
October 30, 2020 EnergyNow Media
By Alex Longley
(Bloomberg) Oil is heading for its largest monthly decline since March as a resurgent pandemic forces tighter restrictions, crimping demand for auto and aviation fuel.
Futures fell 0.5% in New York on Friday and have slumped almost 11% this month. Infections surged to a record in the U.S. Midwest, while parts of Europe clamped down to slow down the spread.
Prices have fallen this week with signs that both road use and airline capacity in Europe have dwindled. Still, there’s some support from booming freight markets and improvements in China and India. All the while, traders are looking ahead to next week’s U.S. election and an OPEC+ meeting at the end of November.
“The ebb and flow of risk appetite remains tied to Covid-related developments,” said Harry Tchilinguirian, oil strategist at BNP Paribas SA. Stricter restrictions in Europe “need to be weighed against growing goods consumption channeled through e-commerce that is fueling diesel use in freight and delivery activities.”
West Texas Intermediate for December delivery fell 17 cents to $36 a barrel as of 9:07 a.m. in New York
Brent for the same month, which expires Friday, gained 0.1% to $37.67
The mixed signs on demand are also evident in France where a renewed lockdown is taking effect. Though use of motorways was down last week, data from TomTom NV show that traffic in Paris surged on Thursday night as people tried to leave the city.
However, despite the pockets of strength in demand, the overall outlook continues to be weak. BP Plc will cease fuel production at its Kwinana refinery in Australia, which can process 146,000 barrels a day. It follows the idling of a plant by PBF Energy Inc. in the U.S. earlier in the week.
Other oil stories:
Exxon Mobil Corp. warned it may take up to $30 billion in writedowns on natural gas fields after posting a historic loss despite sweeping budget and job cuts.
Chevron Corp. posted a surprise profit as the oil supermajor slashed capital spending to cope with the pandemic-driven collapse in crude demand.
Total SE continued to ride out tough times for the oil industry by posting third-quarter profit that exceeded the highest analyst estimate, paying down debt and maintaining a generous dividend.
Repsol SA has invested more in recent months in developing renewable power projects than searching for oil and gas, offering the latest example of how Europe’s energy giants are accelerating their shift away from fossil fuels.
Iraq reaffirmed its support for the OPEC+ oil-production cuts and won’t be seeking any exemption from the curbs next year, Oil Minister Ihsan Abdul-Jabbar said in a statement.
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