LONDON: Oil prices fell on Monday, weakened by the possible return of Libyan production and as rising coronavirus cases stoked worries about global demand, although the market drew support as a tropical storm threatened to disrupt output in the U.S. Gulf of Mexico.
Brent crude was down $1.21 at $41.94 a barrel by 1346 GMT. U.S. crude fell $1.21 to $39.90 a barrel. Both contracts were set for their biggest daily drops in two weeks.
Workers at Libya’s major Sharara field have restarted operations, two engineers working there said, after the National Oil Corporation announced a partial lifting of force majeure. But it was unclear when and at what level production might restart.
Meanwhile, a Suezmax tanker is making its way to Libya’s Marsa El Hariga terminal, according to Refinitiv Eikon shipping data.
“(The) oil market is facing a fork in the road this week when it comes to pricing, and which option it chooses to travel will largely depend on how much real progress will come about in Libya,” BNP Paribas analyst Harry Tchilinguirian said.
Goldman Sachs stuck to its forecast for Brent to reach $49 a barrel by year-end and $65 by the third quarter next year, despite the Libyan developments. Barclays raised its 2020 Brent outlook to $43 a barrel and $53 next year.
Bullish sentiment is underpinned by the hope for improved compliance with an output cut deal among members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
But a rise in coronavirus cases could cut demand.
More than 30.78 million people have been infected by the novel coronavirus, a Reuters tally shows, and British Prime Minister Boris Johnson was on Monday pondering a second national lockdown, while cases in Spain and France have also climbed.
European equities, which often move in tandem with oil, hit their lowest in seven weeks.
Providing a floor for prices, U.S. tropical Storm Beta, the 23rd named storm of this year’s Atlantic hurricane season, moved ashore threatening production.
(Additional reporting by Jessica Jaganathan; editing by Louise Heavens and David Evans)
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