Oil steadies but coronavirus and supply pressures remain

[October 20, 2020]  By Ahmad Ghaddar

LONDON (Reuters) - Oil prices steadied on Tuesday but remained under pressure from rising Libyan output and the threat to demand from a global resurgence in coronavirus cases.

Brent crude <LCOc1> futures were trading up 5 cents, or 0.1%, at $42.67 a barrel by 1048 GMT. U.S. West Texas Intermediate (WTI) crude <CLc1> futures rose 13 cents, or 0.3%, to $40.96.

Both contracts have been trading in a narrow range of about $2 to $2.50 a barrel over the past two weeks.

COVID-19 cases topped 40 million on Monday, according to a Reuters tally, with a growing second wave in Europe and North America sparking various degrees of lockdown measures.

A meeting on Monday of a ministerial panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, pledged to support the oil market as concerns grow over soaring coronavirus cases.

For now OPEC+ is sticking with a deal to curb output by 7.7 million barrels per day (bpd) to the end of the year and then increasing production by 2 million bpd in January.

"Monday's JMMC meeting failed to match market hopes of scrapping the planned output rise in January amidst an increasingly precarious demand environment," JBC Energy said.

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant

OPEC watchers, including analysts from U.S. bank J.P. Morgan, have said that a weak demand outlook could prompt OPEC+ to delay the reduction in curbs.

"Demand recovery is uneven ... Today this process has slowed down because of a second coronavirus wave but has not yet fully reversed," Russian Energy Minister Alexander Novak told the JMMC meeting.

OPEC member Libya, which is exempt from the cuts, is ramping up production after armed conflict shut almost all of the country's output in January.

Output from its biggest field, Sharara, resumed on Oct. 11 and is now at about 150,000 bpd, about half its capacity, two industry sources told Reuters.

Another 70,000 bpd oilfield is expected to restart on Oct. 24.

(Additonal reporting by Sonali Paul in Melbourne and Roslan Khasawneh in Singapore; Editing by David Goodman)

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