Oil steady on new lockdowns, vaccine hopes

Oil steadied on Monday, pressured by concerns over surging coronavirus cases globally and by Libya’s plan to boost output, however, prices found some support from hopes of a US fiscal package and expectations of a vaccine by the end of current year.

Brent LCOc1 was up $0.01 at $42.94 a barrel at 1203 GMT. US crude CLc1 was also up $0.01 at $40.89.

Worldwide coronavirus cases crossed 40 million on Monday, according to a Reuters’ tally.

“Even if the recent record-high new cases of Covid-19 worldwide have not yet caused demand forecasts to be revised further downwards, there is no sign as yet of the hoped-for recovery,” said Commerzbank analyst Eugen Weinberg.

Many European governments are tightening lockdowns to curb the spread of virus.

“This latest swathe of stringent restrictions will inevitably impede economic growth and undermine the fuel demand recovery,” said Stephen Brennock of oil broker PVM.

Investors are focusing on the OPEC+ oil producer group’s Joint Ministerial Monitoring Committee (JMMC) meeting later on Monday. OPEC+ consists of the Organisation of the Petroleum Exporting Countries (OPEC) and producer allies such as Russia.

The committee is expected to discuss the weakening demand outlook as well as increased output from Libya, but is unlikely to recommend immediate action, sources told Reuters.

The Kremlin signalled on Monday a new round of oil talks with Saudi Arabia ahead of the meeting.

Libya has significantly boosted its production after the easing of a blockade by eastern forces in September. The 70,000-barrels-per-day Abu Attifel oilfield is expected to restart on October 24 after being shut down for months, two engineers said.

But hopes for a new US stimulus lent some support to prices as House Speaker Nancy Pelosi said on Sunday she was optimistic that legislation on a wide-ranging relief package could be pushed through before election.

Drugmaker Pfizer said on Friday it could file in late November for US authorisation of the Covid-19 vaccine it is developing, suggesting that a vaccine could potentially be available in the US by the end of the year.

Bank of America projected Brent and WTI would average $44 and $40 per barrel respectively in 2020 and $50 and $47 per barrel in 2021.

Meanwhile, China’s oil-buying frenzy earlier this year is expected to slow in the fourth quarter. Chinese refiners slowed their processing rates in September.