Libya signaled that it will continue production and supply will increase after ending the blockade that lasted for months. Oil fell on Monday amid worries about stalling global economic recovery and slacking fuel demand.
Brent crude LCOc1 was down 33 cents, or 0.8%, at $39.50 a barrel while West Texas Intermediate (WTI) crude futures CLc1 were down 34 cents, or 0.9%, at $36.99 a barrel by 0955 GMT.
Both benchmarks fell for the second week in a row, with last week’s drop.
Coronavirus infection rates are rising again, with an increasing number of countries experiencing local lockdowns that hamper regional economic growth. The number of unemployment does not decrease, the dark clouds over the oil demand continues.
Libya’s announcement that the blockade of oil export terminals may be coming to an end will add to the importance of OPEC +’s meeting this week. Concerns about excess supply have to be brought to the table. The group is meeting on September 17 to discuss compliance with deep cuts in production, but analysts do not expect any further cuts.
However, Tropical Storm Sally was set to become a category 2 hurricane, gaining power in the Gulf of Mexico, west of Florida, on Sunday. The storm is cutting oil production for the second time in less than a month after hurricane Laura wreaked havoc in the region.
Typically, oil rises when production is stopped. However, as the coronavirus epidemic worsens, demand concerns come to the fore and global supplies continue to increase as demand falls.
At the moment, several negativities are happening at the same time that cause oil prices to drop. Hurricanes, cessation of oil production, increase in pamdemi cases and decrease in demand in the USA, which is the world’s largest oil consumer and producer, greatly affect global oil prices.