By Adam Claringbull
Brent oil futures rose 0.51% to $41.02 by 12:05 PM ET (4:05 AM GMT) and WTI futureswere up 0.44% to $38.73.
Oil pulled up from its downward trajectory in Asian trade this morning, with a record-breaking 11th hurricane on its way into the Gulf of Mexico. Hurricane Zeta is due to make U.S. landfall on Wednesday, with U.S. rigs and refineries shutting down in preparation for it its arrival.
However, the global surge in COVID-19 cases, especially in Europe and the U.S., has dampened investor enthusiasm for oil, with few signs of an economic recovery any time soon. The U.S. is particularly hard hit, especially in the Sunbelt and Midwest regions.
Lowered demand expectations are not the only factor hampering the market, Libya has returned from its embargo much more rapidly than expected, with the nation now producing close to 1 million barrels per day (bpd), up from less than 100,000 bpd in July.
Further negative sentiment is being raised by the lack of the U.S. government’s ability to decide on and pass a coronavirus stimulus package, with only a very small likelihood of relief measures being passed before the country’s Nov. 3 elections. U.S. House of Representatives Speaker Nancy Pelosi said that she was hopeful a deal could be reached with the White House before that date, but it is unlikely that the U.S. Senate will also agree.
Director of energy futures at Mizuho Securities, Bob Yawger, told Reuters: “The market is under pressure from a toxic brew of no stimulus, rapidly increasing coronavirus cases, and the surprise increase of oil production in Libya.”
The Organization of the Petroleum Exporting Countries (OPEC), has been planning to ease previously agreed production cuts, however, this is looking increasingly unlikely in the present climate, with OPEC Secretary General Mohammad Barkindo saying on Monday: ““We have no illusions, this recovery will take a long time,” at the virtual 2020 India Energy Intelligence Forum.
Investors await crude oil supply data from the American Petroleum Institute, due later in the day.