WTI crude finished the week slightly higher while products finished lower by a small margin. A trifecta of rebounding supply caused a moderate selloff on Monday. On Sunday, US workers began returning to Gulf platforms that had been evacuated ahead of Hurricane Delta. In Libya, force majeure was lifted from its largest oil field, Sharara; production is now close to 500 kbpd, nearly half of Libya’s total capacity. In Norway, the successful end of a workers strike through mediation returned supply back to the market.
The IEA came out with its annual World Energy Outlook this week. As we covered on Tuesday, A lot of different scenarios could play out depending on how long the pandemic lasts, how and when economies recover, and how society has changed. Regarding oil, the agency expects developed nations to see oil demand fall by 4 MMbpd over the next decade, while total global demand continues to rise.
Looking ahead, OPEC meets soon to discuss plans and cuts. OPEC had seen 102% compliance with stated cuts from members and allies in September. With added supplies coming online from Libya, OPEC will need to decide whether to ease production cuts as planned in January or to try and balance the market by tightening supply. Recent statements from OPEC+ members suggest they will not change their existing strategy, which currently includes moderating cuts in January 2021.
New restrictions to slow the surge of coronavirus cases has increased uncertainty about the pace of economic and fuel demand recovery. The United Kingdom and France have instituted new restrictions to curb their swelling infection rates. There is rising concern that India will overtake the US in overall number of infections as upcoming holiday travel threatens to cause the spread of the virus.
Prices in Review
WTI Crude opened the week at $40.40. It followed a choppy path throughout the week. Crude opened Friday at $40.88, an increase of 48 cents (1.2%).
Diesel opened the week at $1.1898. It generally followed a choppy track throughout the week. Diesel opened Friday at $1.1847 a loss of 0.5 cents (-0.4%).
Gasoline opened the week at $1.2082. It was up and down throughout the week to close the week lower. Gasoline opened Friday at $1.1803, a loss of 2.8 cents (-2.3%).