Oil steady as surging virus cases cloud demand outlook

Oil prices were steady on Monday but on track for their first monthly fall since April as rising coronavirus cases continued to spur concerns about demand.

Brent crude LCOc1 rose $0.12, or 0.3%, to $42.04 a barrel by 1151 GMT. US West Texas Intermediate CLc1 was at $40.36 a barrel, up 11 cents or 0.3%.

“Dollar strength and macroeconomic uncertainty are likely to keep dominating oil’s agenda this week,” said BNP Paribas analyst Harry Tchilinguirian, noting a firming dollar has helped mitigate recent losses.

Still, surging virus cases continued to sow demand doubts.

“The rise in daily infections has accelerated and the total number is now very close to 33 million. The most impacted countries are the populous ones,” PVM analyst Tamas Varga said.

“The speed with which the virus is spreading is the main concern for both health officials and financial investors.”

Russian Energy Minister Alexander Novak said on Monday that the global oil market has been stable for the past few months and the demand-supply balance restored, but warned of the risks of a second wave of Covid-19 cases.

Despite efforts by the Organisation of the Petroleum Exporting Countries (OPEC) and their allies to limit output, more crude is being exported from OPEC producers Iran and Libya.

OPEC Secretary General Mohammad Barkindo said on Sunday that commercial oil inventories in OECD countries are expected to stand only slightly above the five-year average in the first quarter of 2021, before falling below that level for the rest of the year.

A factor that may offer some support to the market is the prospect of industrial action in Norway, where a workers’ strike that may take place on September 30 is threatening to cut its production by 900,000 barrels per day, the Norwegian Oil and Gas Association said on Friday.