Oil fails against Covid-19 and an offer likely to increase

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Brent crude fell 94 cents, or 2.17%, to end at 42.35 dollars. In New York, the WTI lost 1.28 dollars or 3.1% to finish at 39.62 dollars.

Oil prices ended lower on Thursday in light of the evolution of the Covid-19 pandemic, which threatens the recovery of energy demand, and the prospects for a larger supply.

In London, a barrel of Brent North Sea crude for September delivery fell 94 cents, or 2.17%, to $ 42.35.

In New York, the barrel of American WTI for the month of August lost 1.28 dollars or 3.1% to finish at 39.62 dollars.

Investors are cautious about the prospect of “still weak demand and higher supply,” said Ipek Ozkardeskaya, analyst at Swissquote Bank.

The explosion of new cases of Covid-19, in the south and west of the United States in particular, threatens the economic recovery of the first consumer of black gold. Several states have also had to suspend their deconfinement process, or even go back by ordering the closure of bars and restaurants.

“Market players are wondering when we will see the end of the tunnel, when the trend will change,” says Louise Dickson of Rystad Energy. “As the United States, Brazil and other countries continue to be rolled up by Covid-19, the demand is really at stake,” she adds.

On the supply side, “the surplus is still huge in the world oil market,” said Carsten Fritsch and Barbara Lambrecht, analysts at Commerzbank.

Observers and market players are looking in particular at Libya, where crude exports had almost disappeared since January and could return to the market.

The Libyan National Petroleum Company (NOC) announced on Wednesday that it was ready to suspend the situation of “force majeure” at its Es Sider oil terminal, “blocked for six months”, recalls Tamas Varga, of PVM.

“Any increase in Libyan oil production and exports is an additional headache for OPEC +,” he added.

Victim of the civil war, Libyan production had fallen at the start of the year from more than a million barrels per day – average of last year – to less than 100,000, according to data from the Organization of the Exporting Countries of petroleum (OPEC), of which Libya is a part.

If it returned to the market, such a quantity could threaten the fragile balance between supply and demand that the cartel and its allies, known as Opep +, are trying to maintain with great reinforcement of cuts in their production.

Especially since the latter must go from 9.6 million barrels per day (mbd) in July to 7.7 mbd in August, until December.


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