SAT, 31 OCT, 2020-theGBJournal-As national COVID-19 lockdowns is renewed in some European countries and U.S. case count for covid-19 remained at record levels, oil prices plunged this week after spending months trapped in a narrow range around $40 per barrel.
In early trading on Friday, WTI fell to $35 per barrel and Brent was at $37.
Dispute among OPEC members on production cut agreement also mounted pressure on oil prices during the week. Reports say Iraq, the United Arab Emirates (UAE), and Kuwait are no longer inclined to support a rollover of the cuts of 7.7 million barrels per day (bpd), because such cuts are too deep for their economies and budget incomes to sustain.
The growing supply out of Libya is also projected on prices. The country’s crude production is projected to top 1 million barrels per day given that the National Oil Corporation has lifted the force majeure from two of its main oil export terminal.
Crude oil prices has been dithering since September when spot crude prices settled significantly lower, after four consecutive months of gains. The OPEC Reference Basket (ORB) fell by $3.65, or 8.1% m-o-m, to $41.54/b, while the year-to-date averaged $40.62/b.
Crude oil futures prices on both sides of the Atlantic declined during September, for the first time since April. ICE Brent was down 7.0% m-o-m, averaging at $41.87/b, while NYMEX WTI dropped 6.5% m-o-m, settling at $39.63/b.
The Brent-WTI spread continued narrow at just over $2/b. All three futures market structures remained in contango during September, with ICE Brent and NYMEX WTI futures markets moving into a deeper contango, while the contango in DME Oman eased slightly. Hedge funds and other money managers were less bullish on the oil price outlook in September, and were net sellers of crude in both Brent and WTI.
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