Oil holds near $42, heads for weekly loss as virus cases surge

Oil steadied near $42 a barrel on Friday, heading for its first weekly drop in three, as surging coronavirus cases in the United States and Europe raise concerns about demand and Libyan output rises.

Several U.S. states reported record daily increases in infections on Thursday, while France extended curfews for about two-thirds of its population as the second wave of the pandemic sweeps across Europe.

Brent crude rose 6 cents, or 0.1%, to $42.52 a barrel by 0810 GMT having risen 1.7% on Thursday. U.S. crude fell 7 cents, or 0.2%, to $40.57. Both contracts are heading for a loss on the week.

“There is little in the way of support from the demand side in view of the extremely high number of new COVID-19 cases,” said Eugen Weinberg, analyst at Commerzbank. “There is also pressure on prices from the supply side.”

Libyan output, which had been mostly offline since January due to unrest, has reached 500,000 barrels per day (bpd) and will rise further by the end of October.

Oil gained some support from comments by Russian President Vladimir Putin on Thursday that Moscow did not rule out extending OPEC+ oil output cuts if market conditions warranted.

OPEC+, a group that includes Russia and Organization of the Petroleum Exporting Countries, is due to increase production by 2 million barrels per day in January 2021 as part of their plan gradually to pump more as demand recovers.

But the second wave of the pandemic, slowdown in the demand recovery and weakening prices have raised the question of whether the output increase is premature.

OPEC+ made a record supply cut beginning in May that boosted prices from historic lows. Brent is up from a 21-year low below $16 in April.
By Aaron Sheldrick

Gh Extractives

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