By Gina Lee
Investing.com – Oil was down on Friday morning in Asia over the Organization of the Petroleum Exporting Countries (OPEC) plans to ease supply cuts even in the face of rapidly falling fuel demand in Europe and the U.S., two of the biggest fuel consumers, due to rising numbers of COVID-19 cases in both regions.
Brent oil futures fell 0.95% to $42.75 by 12:06 AM ET (4:06 AM GMT) and WTI futures were down 0.90% to $40.59. Although both Brent and WTI futures continued overnight falls, they look set to see small gains for the week and remained above the $40 mark.
Data from the U.S. Energy Information Administration (EIA) released on Thursday showed a 3.818 million-barrel draw in crude oil supplies for the week to Oct. 9, bigger than the forecast draw of 2.835 million barrels and the previous week’s 501,000-barrel build. The American Petroleum Institute reported a 5.422 million-barrel draw in supplies the day before.
OPEC+ is seeking to reduce the current, agreed-to supply cuts of 7.7 million barrels per day (bpd) by 2 million bpd in January, despite the OPEC joint technical committee expressing caution about rising fuel supplies against rapidly falling demand during its meeting on Thursday and OPEC Secretary General Mohammed Barkindo’s warning that fuel demand is looking “anemic.”
However, rising Libyan supply and the increasingly bearish demand outlook could force OPEC+ to extend the cuts already in place into 2021.
“All eyes are on OPEC+ move from January,” Nissan (OTC:NSANY) Securities general manager of research Hiroyuki Kikukawa told Reuters. The OPEC joint ministerial monitoring committee meets on Oct. 18, and OPEC will set policy at its next meeting, to take place from Nov. 30 to Dec. 1.
Fuel demand continues to fall, as rising number of COVID-19 cases caused some European countries, such as the U.K. and France, to implement restrictive measures such as lockdowns and curfews from Friday. The U.S. Midwest also reported increasing numbers of cases as the temperature drops.
“... [This] resurgence in coronavirus infections in Europe and some parts in the United States raised fears over weaker fuel demand, weighing on the market sentiment … with uncertainty over OPEC+ future policy and the U.S. presidential election, the oil prices will likely remain in a tight range for a while,” Nissan Securities’ Kikukawa said.