Futures Movers: Oil down for a 4th-straight session as coronavirus surge stokes demand worries

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Oil futures headed for a fourth-straight session decline on Tuesday, with continued concerns that a surge in COVID-19 cases in Europe and the U.S. will limit energy demand .

Meanwhile, a pickup in output by Libya is adding to supply-related worries.

Oil prices have been pressured by “growing concerns that the second wave of COVID cases globally will choke the oil price recovery, whilst increasing output from Libya is providing additional supply at a time when it is not needed,” said Fiona Cincotta, market analyst at GAIN Capital, in a Tuesday note.

“Tighter lockdown restrictions are being applied globally as the number of COVID cases crosses the 40 million mark, with Europe and the U.S. seeing a strong resurgence,” she said.

In Wednesday dealings, the most-active West Texas Intermediate crude for December delivery CLZ20, -0.58% CL00, -0.58% was down 26 cents, or 0.6%, at $40.80 a barrel on the New York Mercantile Exchange. The front-month November WTI contract CLX20, -0.61% CL.1, -0.61%, which expires at the day’s settlement, was up 26 cents, or 0.6%, at $40.57 a barrel.

The global benchmark, December Brent crude BRN00, -0.37% traded at $42.47 a barrel, down 15 cents, or 0.4%, on ICE Futures Europe.

Several European countries have imposed new restrictions on business activity and travel as COVID-19 cases have risen in recent days. In the U.S., the seven-day moving average of new cases, which smooths out daily irregularities, rose to 56,007, its highest since Aug. 5, according to The Wall Street Journal.

See: Coronavirus update: Global case tally climbs to 40.5 million and WHO expert urges governments to boost contact tracing, isolation and quarantine

Meanwhile, a virtual committee meeting of the Organization of the Petroleum Exporting Countries and their allies on Monday “did little to calm concerns over waning demand and plentiful supply, as Russia and Saudi Arabia avoided giving any indication they would reconsider the planned output increase in January,” Cincotta said.

The current OPEC+ agreement calls for output cuts of 7.7 million barrels a day through December, which will then taper to 5.8 million barrels a day starting in January.

On Tuesday, the Joint Ministerial Monitoring Committee reiterated their commitment to the output-cut agreement and said it “encouraged” participating countries to increase efforts to compensate for “overproduced volumes” to rebalance the market.

“With the committee urging members to remain ‘vigilant and proactive,’ statements from oil ministers suggested no decision on January’s planned output increase were made, with the focus instead remaining for now on enforcing the agreed upon compensatory cuts to ensure overall compliance with the existing deal,” wrote analysts at JBC Energy, a Vienna-based consulting firm, in a note.

“With Libyan supply ramping up, keeping a lid on overall OPEC supply is likely to continue to be a headache for the organization in the months ahead,” they said. “By the time of the next JMMC meeting, scheduled for mid-November, some tough decisions may need to be made. ”

Libya this month resumed operations at its largest oil field.

Back on Nymex, other energy futures saw mixed trading, with November gasoline RBX20, +0.67% up 0.4% at $1.1665 a gallon, but November heating oil HOX20, -0.09% down 0.3% at $1.1551 a gallon.

The American Petroleum Institute will release its weekly figures on U.S. oil supplies late Tuesday, with the Energy Information Administration’s official data due out Wednesday.

November natural gas NGX20, +5.15% tacked on 5% to $2.936 per million British thermal units.

Natural-gas prices got a boost amid forecasts for colder temperatures across most of the U.S., said Christin Redmond, commodity analyst at Schneider Electric.

The market also expects to see a “below-normal storage injection” from the EIA, when it releases data Thursday on natural-gas supplies in storage, she said in a daily report.

Some offshore Gulf of Mexico production remained shut-in through the middle of last week from Hurricane Delta earlier this month, “while demand was relatively strong, it is likely that less gas was sent into storage facilities compared to historical norms,” said Redmond.

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