0203 GMT: Crude oil futures ticked up during the mid-morning trade in Asia on Oct. 27 after oil producers in the US Gulf started shutting in production ahead of Hurricane Zeta, providing some relief to a market weighed down by the increase in barrels from Libya and the resurgent coronavirus pandemic.
At 10:03 am Singapore time (0203 GMT), ICE Brent December crude futures were up 10 cents/b (0.25 %) from the Oct. 26 settle to $40.56/b, while the NYMEX December light sweet crude contract was up 10 cents/b (0.26%) at $38.66/b. Both markers had fallen 3.14% and 3.24% to settle at $40.46/b and $38.56/b, respectively, on Oct. 27.
The uptick in oil prices comes after Oct. 26 data from the US Bureau of Safety and Environmental Enforcement showed that nearly 16%, or 293,656 b/d, of crude production in the US Gulf was offline ahead of Hurricane Zeta.
BP and Equinor confirmed that they have shuttered production on their platforms, with Chevron, BHP and other producers saying that they were evacuating some personnel while considering possible production shut-ins, S&P Global Platts reported on Oct. 26.
This curtailment in supply from the US Gulf has offered some respite to the market, which has been grappling with prospects of oversupply after Libya’s National Oil Corp. said Oct. 26 that it had lifted the force majeure on the 70,000 b/d El Feel oil field.
All of Libya’s key oil fields and terminals are now operational and are looking to ramp-up their production, with NOC saying on Oct. 23 that output from the country could reach 800,000 b/d within two weeks and 1 million b/d within four weeks.
The increase of Libyan output comes after the country’s two warring factions — the Government of National Accord and the Libyan National Army — signed a ceasefire effective in all areas of Libya on Oct. 23 and ended a conflict that had seen the country’s oil output to plummet to as low as 70,000 b/d in the recent months.
Meanwhile, the coronavirus pandemic and an impasse over the US stimulus package continued, thereby giving rise to a bleak demand outlook.
“Countries such as France and Spain are considering a return to full national lockdowns as the virus rages across the continent … Investor sentiment wasn’t helped after talks between US lawmakers on a stimulus package broke down,” ANZ analysts said in an Oct. 26 note.
The OPEC, however, remained positive about oil demand recovery, with Secretary General Mohammed Barkindo saying on Oct. 26 during the India Energy Forum by CERAWeek that the demand contraction seen in the second quarter is unlikely to be repeated.
“The developments for vaccines are continuing around the world, with candidates that have very good prospects of coming to the market as soon as possible,” said Barkindo.