An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China. Picture: REUTERS/STRINGER/CHINA OUT
An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China. Picture: REUTERS/STRINGER/CHINA OUT

London — Oil prices slipped on Monday amid the concern about a stalled global economic recovery and falling fuel demand, as Libya signalled it would end its months-long blockade and resume output, adding yet more supply to the market.

Brent crude was down 33c, or 0.8%, at $39.50 a barrel while US West Texas Intermediate (WTI) crude futures were down 34c, or 0.9%, at $36.99 a barrel by 9.55am GMT.

Both contracts ended last week lower, falling for a second week in a row.

“[Coronavirus] infection rates are on the rise again, there are localised lockdowns introduced in a growing number of countries hindering regional economic growth and the number of unemployed is failing to fall significantly,” oil broker PVM’s Tamas Varga said.

“This leads to dismal oil demand growth.”

In Libya, commander Khalifa Haftar committed to ending a months-long blockade of oil facilities, a move that would add more supplies to the market, though it was unclear if oilfields and ports would begin operations.

“The announcement that the blockade of Libyan oil export terminals may be about to end will add to the woes of Opec-plus’s meeting this week,” said Jeffrey Halley, senior market analyst at Oanda.

Opec and allies, a grouping known as Opec-plus, meet on September 17 to discuss compliance with deep cuts in production, though analysts do not expect further reductions to be made.

However, Tropical Storm Sally gained in strength in the Gulf of Mexico west of Florida on Sunday and was poised to become a category 2 hurricane. The storm is disrupting oil production for the second time in less than a month after hurricane Laura swept through the region.

Typically oil rises when production is shut down, but with the coronavirus pandemic getting worse demand concerns are to the fore, while global supplies continue to rise. The US is the world’s biggest oil consumer and producer.

Reuters

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