Oil fell nearly 2% on Friday, driven by an increase in Libya’s crude oil supply. It also closed the week low due to demand concerns caused by rising coronavirus cases in the US and Europe.
Crude oil prices fell after the Libyan National Oil Company (NOC) announced that the force majeure in exports from major ports was lifted and that production would reach 1 million barrels a day within four weeks.
WTI crude CLc1 settled at $39.85 a barrel, falling 79 cents, or 1.9%. Brent crude LCOc1 settled at $41.77 a barrel, losing 69 cents, or 1.6%.
For the week, WTI crude futures lost 2.5% and Brent futures shed 2.7%.
Italy and several US states reported daily record increases in infections, while France extended curfews to nearly two-thirds of its population as a precaution to the second wave of the COVID-19 pandemic across Europe.
At the exact time when the vaccine is expected to be found and back to work, the re-imposition of restrictions due to increased cases worries investors.
Russian President said on Thursday that Moscow did not ignore the extension of OPEC + oil production cuts. However, time will tell whether this assurance is sufficient to offset rising Libyan production and demand concerns.
OPEC +, including Russia, had decided to increase production by 2 million barrels in January 2021. But bringing those two million barrels back doesn’t seem to make things any easier. This decision is very likely to change.
As indicative of future supply, the total number of US power companies’ drilling rigs increased by five to 287 on the week of October 23rd. So, while Libya supply increases, US producers do not stop.