Oil posted its largest monthly drop since March as renewed lockdown measures to contain the COVID-19 pandemic threatened to upend a shaky demand recovery.
Futures fell 1.1 percent in New York on Friday to end the week below US$36 a barrel, taking their cue from a broader market sell-off and the worst week for US stocks since March.
At the same time, the US posted a record surge in daily COVID-19 infections, while new restrictions in Europe could drive the region toward another recession.
“The risk appetite in the market is definitely lower,” US Bank Wealth Management senior investment strategist Rob Haworth said. “The return-in-demand story is taking a lot longer to play out than oil bulls had hoped.”
A return to tougher lockdown measures would likely deter a substantive rebound in airline demand, with more restrictions in Europe prompting further cuts in airline capacity for the remainder of the year.
Still, there is some support from booming freight markets and improvements in China and India.
All the while, traders are looking ahead to Tuesday’s US presidential election and an OPEC+ meeting at the end of this month.
The concerns over demand come at a time when OPEC and its allies face a challenge in their efforts to keep supply in check with the faster-than-expected return in Libyan output.
Iraq reaffirmed its support for the OPEC+ oil production cuts and would not be seeking any exemption from the curbs next year, Iraqi Minister of Oil Ihsan Abdul-Jabbar said.
Norway’s largest oil field is to pump at pre-pandemic levels after receiving the government’s permission in September.
“There’s a really high level of insecurity out there surrounding the election, surrounding the path of economic growth, and this new surge in infections,” said Bill O’Grady, executive vice president at Confluence Investment Management in St Louis, Missouri. “Until you get some evidence that things are starting to improve, it’s going to be tough for crude to do better.”
The futures curve also continued to weaken.
West Texas Intermediate’s (WTI) front-month contract closed at the deepest discount to its second-month since early September. The spread between the benchmark’s nearest December contracts, a closely watched gauge of market strength, also deepened its contango.
WTI for December delivery on Friday fell 1.1 percent to US$35.72 a barrel, down 10 percent for the week.
Brent for December delivery on Friday lost 0.5 percent to settle at US$37.94 a barrel, down 9.8 percent weekly.
Deteriorating refining margins are spurring refiners to shutter plants or take tentative approaches to reopening facilities as fuel demand remains depressed.
Phillips 66 said a restart of its Alliance refinery in south Louisiana early next year depends on market conditions, while in Australia, BP PLC said it would cease fuel production at its Kwinana refinery.
Exxon Mobil Corp sees more pain ahead for the space, saying there are more oil refineries than the world needs and the least-sophisticated plants would continue to shut down.
“The oil refining sector is witnessing some rather abrupt changes in light of the global pandemic and its continued and long-term impact to global travel,” Rabobank NV commodities strategist Ryan Fitzmaurice said in a note. “Crude import demand to the US and Canada’s east coast is likely to be challenged going forward given the reduction in refining capacity there.”
Additional reporting by staff writer
BYPASSING CHINA TARIFFS: In the first five months of this year, Foxconn sent US$4.4bn of iPhones to the US from India, compared with US$3.7bn in the whole of last year Nearly all the iPhones exported by Foxconn Technology Group (富士康科技集團) from India went to the US between March and last month, customs data showed, far above last year’s average of 50 percent and a clear sign of Apple Inc’s efforts to bypass high US tariffs imposed on China. The numbers, being reported by Reuters for the first time, show that Apple has realigned its India exports to almost exclusively serve the US market, when previously the devices were more widely distributed to nations including the Netherlands and the Czech Republic. During March to last month, Foxconn, known as Hon Hai Precision Industry
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and the University of Tokyo (UTokyo) yesterday announced the launch of the TSMC-UTokyo Lab to promote advanced semiconductor research, education and talent development. The lab is TSMC’s first laboratory collaboration with a university outside Taiwan, the company said in a statement. The lab would leverage “the extensive knowledge, experience, and creativity” of both institutions, the company said. It is located in the Asano Section of UTokyo’s Hongo, Tokyo, campus and would be managed by UTokyo faculty, guided by directors from UTokyo and TSMC, the company said. TSMC began working with UTokyo in 2019, resulting in 21 research projects,
Ashton Hall’s morning routine involves dunking his head in iced Saratoga Spring Water. For the company that sells the bottled water — Hall’s brand of choice for drinking, brushing his teeth and submerging himself — that is fantastic news. “We’re so thankful to this incredible fitness influencer called Ashton Hall,” Saratoga owner Primo Brands Corp’s CEO Robbert Rietbroek said on an earnings call after Hall’s morning routine video went viral. “He really helped put our brand on the map.” Primo Brands, which was not affiliated with Hall when he made his video, is among the increasing number of companies benefiting from influencer
Taiwan’s property market is entering a freeze, with mortgage activity across the nation’s six largest cities plummeting in the first quarter, H&B Realty Co (住商不動產) said yesterday, citing mounting pressure on housing demand amid tighter lending rules and regulatory curbs. Mortgage applications in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung totaled 28,078 from January to March, a sharp 36.3 percent decline from 44,082 in the same period last year, the nation’s largest real-estate brokerage by franchise said, citing data from the Joint Credit Information Center (JCIC, 聯徵中心). “The simultaneous decline across all six cities reflects just how drastically the market
RSS