Oil prices slip as supply fears ease, Bonny Light up by $0.30
Oil prices weakened on Monday as Libya removed force majeure on its biggest oilfield, a Norwegian industrial action hindering production came to a halt and producers in the United States, the world’s top oil producer , started to restore output following Hurricane Delta.
Brent crude declined by 48 cents or 1.2% to $42.37 a barrel at 12:18 West Africa Time (WAT) and West Texas Intermediate was down by 53 cents or 1.31 to $40.07.
Nigeria’s Bonny Light added $0.30 or $0.72 to close at $41.88 at the last session. Qua Iboe, another key national oil grade declined by 0.73 or 1.74% to $41.25 at 06:47 WAT on Monday.
“It’s all about ending production disruptions … (which) are not helpful in a period with ongoing demand concerns,” said UBS oil analyst Giovanni Staunovo.
Following the lifting of force majeure on Libya’s Sharara field on Sunday, production is anticipated to climb to 355,000 barrels per day (bpd).
Increasing Libyan production will stand in the way of plans by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies led by Russia to rein output in order to boost prices.
BNP Paribas analyst Harry Tchilinguirian said “If oil demand recovery continues to struggle due to new or stricter COVID-related mitigation measures, the (OPEC+) producer group may need to reconsider the planned tapering of their voluntary supply cuts.”
Front-month prices for both Brent and WTI added over 9% last week, the biggest weekly advance for Brent since June. The pair depreciated on Friday in the wake of a wage deal negotiation between oil companies and labour union officials, stopping an industrial action the threatened to scale back the country’s oil and gas production by one-fourths.
Hurricane Delta, which did the Gulf of Mexico the most havoc in a decade and a half, was designated a post-tropical cyclone during the weekend.
Workers returned to production platforms on Sunday and Total SE has its eyes set on restart of its 225,500 barrel-per-day Port Arthur, Texas, refinery.
Prices were also hurt a surge in new virus infections that have stoked fears of further lockdowns.
Infections are hitting new highs in the U.S. Midwest and in the United Kingdom Prime Minister Boris Johnson is set to declare new measures on Monday just as Italy is about to impose new nationwide curbs.
In the meantime, Goldman Sachs said U.S. election results would not weigh on its bullish energy forecast and that a sweeping Democratic victory might a game-changer for these sectors.