Oil Slips, Libya Output Looms
Oil prices slipped in commodities on Monday amid rising concerns about a stalled global economic recovery and falling fuel demand. Libya signaled it would end its months-long blockade and resume output, adding yet more supply to the market.
Brent crude fell 33 cents, or 0.8%, at $39.50 a barrel. U.S. West Texas Intermediate crude futures fell 34 cents, or 0.9%, at $36.99 a barrel.
Both contracts ended last week lower declining for a second week in a row.
Oil broker PVM’s Tamas Varga said infection rates are on the rise again. There are localized lockdowns introduced in a growing number of countries.
This is hindering regional economic growth and the number of unemployed is failing to fall significantly, he said. This leads to dismal oil demand growth, Varga added.
In Libya, commander Khalifa Haftar committed to ending a months-long blockade of oil facilities. It’s a move that would add more supplies to the market. Although it was unclear if oil fields and ports would begin operations.
The blockade of Libyan oil export terminals may be about to end. This announcement will add to the woes of OPEC+’s meeting, said Jeffrey Halley, senior market analyst at OANDA.
The Organization of the Petroleum Exporting Countries (OPEC) and allies, a grouping known as OPEC+, meets on Sept. 17. This is to discuss compliance with deep cuts in production, although analysts don’t expect further reductions to be made.
Tropical Storm Sally Disrupts Oil Production
Tropical Storm Sally gained strength in the Gulf of Mexico west of Florida on Sunday. Forecasts assumed the storm to become a category 2 hurricane.
Commodity news reports that the storm is disrupting oil production for the second time in less than a month. This was after hurricane Laura swept through the region.
Typically closed production results in oil rising. But with the COVID-19 pandemic getting worse, demand concerns are on the rise.
Meanwhile, in precious metals, Gold rose gradually on the first day of the week. It was recorded trading near the top end of its daily trading range, located just below the $1,950 zone.
The dominant selling bias currently surrounds the US dollar. This was seen as a major factor that benefitted the dollar-denominated commodity.
The dollar is under selling pressure over doubts on the US fiscal stimulus measures. The odds for a major stimulus have dropped almost to zero. That after Democratic voted to block a Republican bill that might have provided almost $300 billion in new COVID-19 aid.
