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.”
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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