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Oct. 26, 2020, 3:13 p.m. EDT

Oil prices settle at 3-week lows as coronavirus cases rise world-wide

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By Myra P. Saefong and William Watts

Oil futures declined Monday, sending prices to their lowest finish in just over three weeks, as COVID-19 cases in the U.S. and Europe continue to surge, raising alarm over demand for crude.

“The oil market is sensitive to the perceptions about global demand, and the sharp rise in COVID-19 cases in Europe and the U.S. has spooked traders,” said David Madden, market analyst at CMC Markets UK.

“The deterioration in the health situation comes at a time when Libya is in the process of upping oil production…which is putting extra pressure on oil,” he said, in a note.

Meanwhile, Mohammad Barkindo , secretary-general of the Organization of the Petroleum Exporting Countries, on Monday said that economic growth and the demand recovery remain “anemic,” according to Reuters .

Speaking during the virtual India Energy Forum by CERAWeek, he remained optimistic that the recovery will continue, and while it may take longer and be at lower levels, OPEC is “determined to stay the course.”

West Texas Intermediate crude for December delivery , the U.S. benchmark, fell $1.29, or 3.2%, to settle at $38.56 a barrel on the New York Mercantile Exchange.

The global benchmark, December Brent crude , dropped $1.31, or 3.1%, to settle at $40.46 a barrel on ICE Futures Europe.

Based on the front-month contracts, WTI and Brent crude marked their lowest settlements since Oct. 2, according to Dow Jones Market Data.

Confirmed global cases of COVID-19 climbed to 43 million on Monday, according to data compiled by Johns Hopkins University, while the death toll rose to 1.15 million. European countries have tightened restrictions on activity in response to surging cases, while the number of U.S. infections saw a record daily rise on Friday, surpassing the previous peak from July.

Meanwhile, news on the supply side of the equation was also a negative, analysts said. Libya’s National Oil Co. at the end of last week lifted force majeure on remaining major oil terminals. A blockade by a militia was lifted in September, but not all facilities had yet come back on line.

According to Reuters , the state-owned oil company said Libya’s output would rise to 800,000 barrels a day within two weeks and 1 million barrels a day within four weeks.

Still, traders kept an eye on potential disruptions to oil and natural-gas production and refinery activity in the Gulf of Mexico as the region braced for another storm, expected to reach the Gulf Coast later this week .

“Another potential hurricane is on track to take another direct hit on U.S. refinery row,” said Phil Flynn, senior market analyst at The Price Futures Group, in a Monday report. “Tropical Storm Zeta is setting its sites on the smart track as Hurricane Laura and Delta, assuring more confusion and potential damage to the U.S. energy Industry.”

On Nymex Monday, November natural gas climbed by 1.8% to $3.024 per million British thermal units.

Futures prices for gasoline and heating oil settled near parity Monday. November gasoline fell by 2.4% to $1.1116 a gallon and November heating oil lost 2.6% to $1.1218 a gallon.

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