- US oil is under pressure, losing over 3% to start the week on supply pressures.
- Demand-side risk is also fuelling the offer as covid’s second wave kicks in.
West Texas Intermediate crude bears are on the warpath, swiping over 3% off the black gold’s price at the start of the week.
The coronavirus pandemic gets a new lease of life on the commodities market’s risk barometer and at the time of writing, WTI is trading at $38.52 and has travelled from a high of $39.72 to a low of $38.31.
Oil futures declined Monday, sending prices to their lowest finish in futures in just over three weeks.
WTI crude for December delivery lost $1.29, or 3.2%, to settle at $38.56 a barrel on the New York Mercantile Exchange.
COVID-19 cases in the US and Europe have surged over the past number of days, with weekend headlines coming with the worst data yet, just as Libya has started to increase oil production.
Confirmed global cases of COVID-19 has soared to 43 million according to the latest data compiled by Johns Hopkins University. The death toll has also climbed to 1.15 million.
The latest surge has forced many European countries to tighten restrictions on activity, but the US infections have also skyrocketed past the prior peak of July, forcing El Paso in Texas to ask citizens to stay at home for the next two weeks.
In Europe, Italy and Spain have imposed new restrictions.
Crude’s right tail remains fat
”Supply support has eased on the margin with Libya lifting the last remaining force majeure at El Feel field. With the demand recovery still on a weak footing and increasing supply from Libya, it is becoming crucial that OPEC+ delay their scheduled production increases as a failure to do so would endanger a fragile rebalancing amid a continued second wave,” analysts at TD Securities explained.
However, the analysts have argued that crude’s right tail remains fat, citing the indications from OPEC+ that are pointing to a likely delay of the scheduled cuts, ”along with the prospect of normalizing demand expectations, large-scale fiscal stimulus and a potential vaccine announcement shortly following the election, energy markets should have a strong base to move higher into 2021.”