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Oil price nears $41 after U.S. Gulf shutdowns, Bonny Light sheds $1.44

Oil set for third weekly gain on China’s increasing demand, Brent gains 1.3%

Oil prices advanced towards $41 a barrel on Tuesday as energy companies closed down some U.S. Gulf of Mexico oil production due to a hurricane, even though escalating coronavirus cases and surging Libyan supply cap gains.

Companies like BP, Chevron and Equinor evacuated rigs, and so far producers have shut 16%, or 293,656 barrels per day (bpd) of crude production on account of Hurricane Zeta.

Brent crude edged up 36 cents, or 0.89% at $40.82 a barrel at 12:17 West Africa Time. U.S. West Texas Intermediate oil gained 37 cents or 0.96% at $38.93 a barrel. Both contracts fell more than 3% on Monday.

Whilst Hurricane Zeta could provide a price relief under the current circumstances, it will be very brief,” said Tamas Varga of oil broker PVM. “The mood is, indeed, souring.”

Read also: Oil prices drop by 2% as COVID-19 pushes demand fears, Bonny Light down $0.49

Oil has fallen by reason of rising COVID-19 infections around the world and a lack of progress on agreeing a U.S. coronavirus stimulus package. Yet, U.S. House of Representatives Speaker Nancy Pelosi is optimistic a deal can be negotiated before the 3rd November 2020.

“The outlook for road fuels demand is souring on rising COVID-19 infections,” said analysts at JBC Energy.

Production in Libya is projected to touch 1 million bpd in the weeks ahead, the country’s national oil company firm said Friday, a swifter return than many analysts had predicted, complicating attempts by other OPEC members and allies to curb supply.

The Organisation of the Petroleum Exporting Countries (OPEC) and its Russia-led allies, a cartel known as OPEC, are looking to ramp up output by 2 million bpd beginning from January following record output reductions this year.

However Russian President Vladimir Putin, speaking last Thursday, did not rule out prolonging the cuts for longer.

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