Oil prices continue to decline and end the week in the red amid fears of lower demand due to the return of restrictive measures in a number of countries, including France and the UK, as well as signals of a possible increase in supply.
The cost of November futures for Brent oil on the London stock exchange ICE Futures by 18:34 Moscow time was $ 41.81 per barrel, which is $ 0.13 (0.31%) lower than the price at the close of the previous session.
The price of futures for WTI crude oil for November in electronic trading on the New York Mercantile Exchange (NYMEX) by this time decreased by $ 0.19 (0.47%) – to $ 40.12 per barrel.
Since the beginning of the week, both contracts have lost more than 3% in value, according to data from FactSet.
“Investor apprehension has risen this week as the recent surge in coronavirus cases has raised questions about what the second wave will mean for the global economy and resource demand,” said Colin Cieszinski, chief market strategist at SIA Wealth Management, quoted by MarketWatch.
According to the expert, for the recovery of oil prices, “signs are needed that the risk of a serious rollback of the current recovery is decreasing, and demand continues to grow.”
Earlier in the course of trading, oil rose in price on the news that the Democrats may present a new package of measures to support the US economy next week. According to CNBC, the volume of the new package could be $ 2.4 billion, which is about $ 1 billion less than the previous proposal of the Democrats.
The day before, Bloomberg reported, citing oil traders, about a sharp increase in the supply of Iraqi oil for delivery in October. This could mean an increase in production in the country, which should, on the contrary, reduce production in excess of the established quotas in accordance with the compensation mechanism under OPEC +.
Also this week, the Libyan National Oil Corp. reported the resumption of oil production in the east of the country after the commander of the Libyan National Army (LNA) Khalifa Haftar announced the lifting of an eight-month blockade of oil fields and ports as a result of an agreement with the government in Tripoli.
“The bearish sentiment, driven by expected increases in supplies from Iraq and Libya, as well as renewed increases in COVID-19 in Europe, outweigh the market impact of declining US oil inventories,” said Vandana Hari, founder of Vanda Insights in Singapore.
AxiCorp experts note that while there are several factors that put pressure on the oil market, the key is still the expected decline in demand.