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Oil prices extend rally ahead of U.S. election, Bonny Light gains $0.21

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4 years ago

November 3, 2020

Oil prices climb further amid bleak outlook as Bonny Light hits $26.13

Oil prices extended their rebound on United States Election Day in the midst of recovery in financial markets on Tuesday even though fears over increasing coronavirus infections around the world limited further gains.

Brent crude futures inched up 95 cents or 2.44% to $39.92 a barrel at 10:29 West Africa Time, while U.S. West Texas Intermediate (WTI) crude futures were up $1.08 or 2.93%, to $37.89 a barrel. Both benchmarks were higher by nearly 3% on Monday.

“The jump has borne all the hallmarks of a massive, logical and even inevitable short-covering prior to the U.S. presidential elections,” Tamas Varga of oil brokerage PVM told Reuters.

“It would be tempting to conclude that the recovery from last week’s slump is now under way, but it is simply not a plausible scenario,” he further said.

In Europe, Italy is the latest country to firm up coronavirus restrictions, including limiting travels between the worst-affected regions and putting in place a nightly curfew, which will cap fuel demand.

Benchmark prices, which were steeply down over the past week, had a brief reprieve on Monday following Russia’s oil minister’s talks with indigenous oil firms on a potential extension of oil output curbs into the first quarter of next year.

The Organisation of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a cartel known as OPEC+, cut oil output from May to shore up prices and reduced the cut to 7.7 million barrels per day (bpd) in August. They are due to review the cuts by 2 million bpd in January.

“The hope is now that a continued cut at current levels will be the necessary bridge over the second COVID-19 wave until vaccines are rolled out during the first half of 2021,” Commerzbank said.

Surging supply from Libya, which is on track to reach 1 million bpd in the weeks ahead from just 100,000 bpd in early September, will also be something for OPEC+ to worry about.

OPEC+ holds its next full meetings on 30^th November and 1^st December.

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