By Adam Claringbull
Investing.com – Oil was up on Friday morning in Asia after further sustained falls overnight. Prices hit a four-month low with COVID-19 surges threatening demand. Slowing demand combined with oversupply is pulling prices down.
Brent oil futures were up 0.47% to $38.44 by 12:22 AM ET (4:22 AM GMT) and WTI futures gained 0.53% to $36.36.
Both Brent and WTI futures remained below the $40 benchmark with further falls expected, though Asian demand pulled up the general slide. Oil is now at its lowest point since May, and with the COVID-19 pandemic resurgent across Europe and the U.S., demand is forecast to remain weak for the foreseeable future.
In Europe, Germany and France are preparing for major public restrictions, with France going into lockdown on Friday, and Germany following it on Monday. COVID-19 cases are rapidly rising across Europe, and any economic recovery is looking increasingly unlikely for some time to come.
In the U.S., 41 of 50 states are reporting a 10% or more increase in COVID-19 cases, with the country hitting its highest daily total of new cases since the coronavirus pandemic began. This, coupled with uncertainty over how the U.S. presidential election might play out, is also keeping demand expectations low.
Issues of oversupply are also dogging the markets, with the Organization of Petroleum Exporting Countries and allies (OPEC+) mulling over a continuation of the supply cuts currently in place. The cartel had been considering a relaxation of the restrictions, beginning in January.
Further oversupply worries are being caused by Libya’s return to the markets, with the country’s current production at 680,000 barrels per day (bpd) and expected to hit 1 million bpd in a few weeks. This comes after an 8-month embargo on the country’s exports.