Oil rises as hurricane approaches but virus and supply curb gains
US companies have shut 16% of oil output due to Hurricane Zeta as Libyan output increases despite lack of demand
London — Oil rose on Tuesday towards $41 a barrel as oil companies shut down some US Gulf of Mexico oil output due to a hurricane, though surging coronavirus infections and rising Libyan supply limited gains.
Companies including BP, Chevron and Equinor evacuated rigs, and so far producers have shut 16%, or 293,656 barrels per day (bpd) of oil output due to Hurricane Zeta.
Brent crude was up 13c, or 0.3%, at $40.59 a barrel by 9.15am GMT. US oil (WTI) gained 27c, or 0.7%, to $38.83. Both contracts fell more than 3% on Monday.
“While Hurricane Zeta could provide a price relief under the current circumstances, it will be very brief,” said Tamas Varga of oil broker PVM. “The mood is, indeed, souring.”
Oil has declined because of rising coronavirus infections globally and a lack of progress on agreeing a US coronavirus relief package. Still, US House of Representatives speaker Nancy Pelosi is hopeful a deal can be reached before the November 3 election.
“The outlook for road fuels demand is souring on rising Covid-19 infections,” said analysts at JBC Energy.
Libyan production is expected to reach 1-million bpd in the coming weeks, the country’s national oil company said on Friday, a quicker return than many analysts had predicted, complicating efforts by other oil cartel Opec members and allies to restrict output.
Opec and allies, including Russia (Opec+), are planning to increase production by 2-million bpd from January after record output cuts this year. But Russian President Vladimir Putin, speaking last Thursday, did not rule out extending the cuts for longer.
The latest round of US inventory figures due later on Tuesday and Wednesday are expected to show rising supplies. Analysts expect crude stocks to rise by about 1.1-million barrels.
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