While successive tropical storms in the Gulf of Mexico caused limited losses, rising coronavirus cases and Libya’s return to potential production raised concerns about global demand and oil prices plummeted accordingly on Monday.
Brent crude was down 33 cents, or 0.8%, at $42.82 a barrel by 0645 GMT, while West Texas Intermediate (WTI) crude was down 38 cents, or 0.9%, to $40.73 a barrel.
Activities in Libya’s large Sharara oil field are said to have resumed operations after the National Oil Corporation announced that the force majeure had been partially lifted. However, it is unclear when production will resume.
The fact that more crude oil enters the oil market where demand is already low is not very positive in terms of prices.
The coronavirus, which infects more than 30.78 million people and killed 954,843 people globally, has paralyzed travel and business activities and continues to do so. With the virus escalating rapidly in France, Spain and the UK, there is the fact that the US is ready for at least one more cycle during the fall and winter months, while it’s difficult to write a positive scenario about crude oil demand.
Even if the energy markets ignore the return of production from Libya or the seasonal hurricane season, oil prices could not escape the view of decreasing demand. While the efforts of OPEC and its allies, and hurricanes are the lifeblood for oil prices by reducing supply, OPEC and its allies’ failure to adhere to the decisions taken, the increased supply of reopenned drilling activities in Libya and the US affect oil prices negatively.
A major oil firm has stopped production in the US Gulf of Mexico and started evacuating its workers from its platform.
Beta, the 23rd named tropical storm of this year’s Atlantic hurricane season, is expected to come ashore Monday night, bringing heavy rain to the shores of Texas and Louisiana.
Oil and gas producers had resumed offshore operations at the weekend after being disrupted by Hurricane Sally. Approximately 17% of the US Gulf of Mexico offshore oil production and approximately 13% of natural gas production had been shut down by Sally’s pressure.