Oil rose on Tuesday towards $41 a barrel as oil companies shut down some U.S. Gulf of Mexico oil output due to a hurricane, although surging coronavirus infections and rising Libyan supply limited gains.
“Whilst Hurricane Zeta could provide a price relief under the current circumstances, it will be very brief,” said Tamas Varga of oil broker PVM. “The mood is, indeed, souring.”
Oil has declined because of rising coronavirus infections globally and a lack of progress on agreeing a U.S. coronavirus relief package. Still, U.S. House of Representatives Speaker Nancy Pelosi is hopeful a deal can be reached before the Nov. 3 election.
“The rising number of infections, lockdowns and travel restrictions is a serious threat,” said Paola Rodriguez-Masiu of Rystad Energy. “The situation at the moment looks more pessimistic than not.”
Libyan production is expected to reach 1 million bpd in coming weeks, the country’s national oil company said on Friday, complicating efforts by other OPEC members and allies to restrict output.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, are planning to increase production by 2 million bpd from January after record output cuts this year.
But Russian President Vladimir Putin, speaking last Thursday, did not rule out extending the cuts for longer.
The latest U.S. inventory figures due later on Tuesday and on Wednesday are expected to show rising supplies. Analysts expect crude stocks to rise by about 1.1 million barrels.