The Rebound in COVID-19 Cases is Expected to Weigh on Oil Demand

The West Texas Intermediate and Brent crude oil futures ended slightly lower on Friday. They were pressured by concerns about the rebound in COVID-19 cases in the United States and Europe. It will surely continue negatively affecting demand in two of the world’s most fuel-consuming regions.

On Friday, December WTI futures settled at $41.12, falling $0.12 or -0.29%. Additionally, December Brent crude oil closed at $42.93, falling $0.23 or -0.54%.

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OPEC’s New Concern about Supply and Demand

OPEC+, a group made up of the Organization of the Petroleum Producing Countries and several other allies such as Russia, face concerns over a second wave of coronavirus prolonged in time and increased Libyan production. These two factors could make supply higher than the demand next year. Reuters found this information in a confidential document that showed much more negative projections than those of a month ago.

The Joint Technical Committee, a group of experts belonging to OPEC+, held its monthly meeting virtually on Thursday, dealing with the worst possible scenario from now on. This scenario will include the possibility that the primary consumers’ commercial reserves would remain above the average of the last five years during 2021, instead of falling below that mark.

The Number of Active Platforms in the US Registers its Largest Increase Since January

US energy companies added the highest number of oil and natural gas extraction platforms since January. A return of producers to the fields is explained by the fact that crude prices have dropped. They have been holding around $40 for several months.

The Baker Hughes Co. company said in a report released Friday, closely followed by investors, that the number of active rigs extracting oil and natural gas – a leading indicator of future production – rose for the fifth week in a row. The amount increased by 13 to reach a total of 282 during the week ending October 16.

The breakdown of the data showed that the number of oil drilling rigs in the United States posted its biggest increase since January. As a result, rising by 12 to 205 for the week. While the number of rigs extracting gas rose by 1 to arrive at 74.

The total number of active rigs fell to an all-time low of 244 during the week ending August 14. This included a drop in rigs extracting oil up to 172, its lowest level in the last fifteen years.