Oil Rises Near $40 a Barrel After Biggest Decline in Two Weeks
October 22, 2020 EnergyNow Media
By Elizabeth Low and Alex Longley
(Bloomberg) Oil rose near $40 a barrel in New York after the biggest drop in two weeks on Wednesday following a surprise jump in U.S. gasoline stockpiles and slowing demand.Motor fuel inventories last week rose the most since May and a measure of the fuel’s consumption slid to the lowest level since late September, according to government data. European equities erased earlier declines on Thursday after positive corporate earnings, boosting sentiment that also helped push crude futures higher.
Oil is being held in a tight band by a resurgent coronavirus that is threatening demand. At the same time, additional supply is flowing from Libya while the Organization of Petroleum Exporting Countries and its allies are debating if they should follow through on their plan to raise output from January. The group this week warned of a “precarious” market outlook
“On balance, the sector is doing pretty well considering the increased number of headwinds,” said Ole Hansen, head of commodities strategy at Saxo Bank.
West Texas Intermediate for December delivery rose 0.8% to $40.35 a barrel as of 12:44 p.m. London time, after declining 4% on Wednesday
Brent for the same month gained 0.8% to $42.08
One bright spot for fuel consumption is China. Traders are buying up cargoes and sending them toward Asia’s biggest economy, hoping to capitalize on an expected surge in demand at the end of the year. Russia’s ESPO crude, a grade often purchased by Chinese refiners, traded at a premium of $2.20 to Dated Brent, traders said.
Other oil-market news:
Exxon Mobil Corp. plans to lay off an unspecified number of employees as low oil prices force the company to delay major projects, Chief Executive Officer Darren Woods said in an email to staff.
The shipping sector is providing an outlet for surplus oil products such as diesel that have swelled due to a virus-driven demand hit, but questions about changing ship fuel quality are starting to raise concerns.
After years of setbacks and false starts, Libya is back in the oil game. A stalemate between the armed forces battling to control the OPEC nation has led to an uneasy truce, and most fields and ports shuttered amid the fighting are operating once again
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