By Adedapo Adesanya
Oil futures were mixed on Wednesday, September 30 as demand worries overpowered positive data from the United States government which showed a third consecutive weekly decline in domestic crude supplies.
The international benchmark futures, Brent crude, fell by 0.19 per cent or 8 cents to trade at $40.95 per barrel while the US benchmark West Texas Intermediate (WTI) crude futures rose 0.22 per cent or 13 cents to $40.08 per barrel.
The Energy Information Administration (EIA) reported Wednesday that U.S. crude inventories fell for a third straight week, down by 2 million barrels for the week ended September 25. That compared with an average climb of 1.9 million barrels expected by analysts.
However, despite this, the premise for oil prices is not positive with another wave of the coronavirus impacting demand as the market goes through the fourth quarter.
Coincidentally, Brent prices were down 9.6 per cent for the month of September while the US benchmark saw a monthly fall of 5.6 per cent. This is the first monthly drop for oil prices since the black month of April.
According to market analysts, as long as there is no working vaccine against the coronavirus, oil remains threatened by negative demand-side factors.
The global tally for confirmed cases of the coronavirus that causes COVID-19 climbed to 33.8 million on Wednesday, according to the latest data while the death toll rose to 1.01 million. The largest oil-consuming nation, the US, has the highest case tally at 7.2 million, and the highest death toll at 206,494.
Not on just on the demand side, the supply side of the market also appears to be facing renewed worries despite efforts to close the gap.
Libya’s Sarir oilfield, which was producing more than 300,000 barrels per day last year, restarted output after eastern forces lifted an eight-month blockade on energy facilities.
Also weighing heavily on markets is the continued depressed demand for jet fuel, with air travel still not getting patronage due to coronavirus restrictions and a general fear of people to travel.
Refineries have been trying to find ways to blend their product but an oversupply remains and some plants will be forced to shut down.
To counter the fall in demand, it has been noted that the Organization of the Petroleum Exporting Countries (OPEC) may not increase oil production as planned from January next year. The oil cartel had reduced supply by a record 10 per cent for three months to help stabilise the market and has now tapered it to about 8 per cent.
Also keeping traders and investors on the seat is the November US presidential election, which may remain undetermined on election night, with both candidates contesting the results.
President Donald Trump and Democratic contender Joe Biden on Thursday morning ended the first debate as more are expected to follow.
