Increasing coronavirus cases in the US and Europe raise concerns about energy demand, while Libya’s rapidly growing production is also putting pressure on prices. Oil prices fell on Monday, increasing last week’s losses.
Brent LCOc1 was down $1, or 2.4%, at $40.77 by 0905 GMT. West Texas Intermediate (WTI) dropped $1.01, or 2.5%, to $38.84.
Both contracts fell almost 2.5% last week.
The United States declared the highest number of new coronavirus infections in two days on Saturday. New cases in France hit a record of over 50,000 on Sunday. Italy and Spain imposed new restrictions on the virus as a precaution.
The increasing number of cases not only highlights the risks posed by emergency transport restrictions, but also reduces long-term demand expectations.
On the supply side, Libya’s oil supply is growing faster than many analysts anticipate. Although allied producers, including OPEC and Russia, are preparing to increase production by 2 million barrels in January 2021, supply is the last thing the market needs right now while concerns about the demand outlook mounting again.
Meanwhile, the Russian President stated last week that he could agree to extend OPEC + oil production cuts.
As an indicator of supply expectation, the increase in the number of drilling rigs by energy companies in the USA, which was observed last week, is not a very positive attitude towards investment.
In a statement released on Friday, it was highlighted that investors increased their net long positions in US crude oil futures and options throughout the week.