Crude dropped by more than a dollar on Thursday as the market weighed the impact of the spread of virus cases
Oil fell as the International Energy Agency said a jump in Covid-19 cases could derail the market recovery, while Libya signalled the potential restart of crude exports.
Futures slipped below $39 a barrel in New York, and are down 4.7% this week. The IEA said the demand recovery is at risk from a resurgence in virus cases across major economies, which has prompted tighter restrictions to curb the outbreaks. In Libya, the national oil company announced it would lift force majeure on all exports following months of near-zero shipments.
Crude dropped by more than a dollar on Thursday as the market weighed the impact of the spread of virus cases. California, Texas and Florida have recorded some of their biggest daily gains in cases and deaths this week, with the outbreak impeding efforts to reopen the economy at a time when companies are cutting costs wherever they can. That’s helped push some market gauges down to their weakest levels in almost a month.
America is still in the throes of the pandemic and this spells bad news for the oil demand outlook, said Stephen Brenock, an analyst at brokerage PVM Oil Associates. Against this backdrop, upside potential for oil prices will remain in short supply.
With Libya’s National Oil Corp. lifting force majeure — a legal status protecting a party if it can’t fulfil a contract for reasons beyond its control — the African country may be able to resume shipments halted by a prolonged blockade of fields and ports. Nevertheless, the NOC warned that technical issues at oil deposits, pipelines and terminals would keep production at low levels.
In key locations outside Asia, where delays unloading shipments have complicated the picture, floating inventories have halved to about 35 million barrels since peaking in May, according to Vortexa Ltd., an analytics firm. In the vital North Sea market, the hoard has shrivelled, with just a single ship now left on storage, tracking data compiled by Bloomberg show.
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