By Adedapo Adesanya
Oil futures came out stronger on Monday, September 28 even as rising cases of the coronavirus continued to plague energy demand.
The international benchmark futures, Brent crude, gained by 1.22 per cent or 51 cents to trade at $42.43 per barrel while the US benchmark West Texas Intermediate (WTI) crude futures rose 0.78 per cent or 33 cents to $40.62 per barrel.
The global tally for confirmed cases of the coronavirus that causes COVID-19 climbed to 33.5 million on Monday while the death toll crossed the one-million mark.
According to analysts, oil prices resumed their uptrend as investors turned more optimistic about global growth prospects, which seem most likely to hinge on COVID-19 control in various countries and the outlook for vaccine approval and distribution.
Despite this, the global health crisis, which has slashed global fuel consumption, kept oil prices from moving much higher.
Contributing support to oil prices on Monday was a possible disruption to oil output in Norway. The Norwegian Oil and Gas Association said oil firms in Norway plan to close down 22 per cent of the country’s oil-and-gas output or 900,000 barrels of oil equivalent per day if oil workers go on strike this week.
Also boosting oil prices was one of the heaviest clashes between Armenia and Azerbaijan, which started in 2016. A fight broke out over the weekend, reigniting concern about stability in the South Caucasus, a corridor for pipelines carrying oil and gas to world markets.
Azerbaijan is the 24th largest crude oil producer in the world and a significant producer of natural gas, which both account for more than 90 per cent of the country’s exports. Its pipelines make it a strategic gateway to oil and gas in the Caspian and a growing source of energy security for Europe.
Demand worry has continued to grip the market as Russian Energy Minister, Mr Alexander Novak said the global oil market had been stable for the past few months, but warned of the risks of a second wave of COVID-19 cases.
Despite efforts by the Organization of the Petroleum Exporting Countries and its allies, OPEC+ to limit output, more crude is being exported from OPEC producers Iran and Libya.
The North African country has opened several export terminals and production could rise significantly before the end of the year.
OPEC Secretary-General, Mr Mohammad Barkindo, also warned that commercial oil inventories in some 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.
Dipo Olowookere