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U.S. oil falls on de­mand re­cov­ery warn­ings

- An­dres Guerra Luz Business · Futures Market · Finance · Stocks & Markets · Oil Prices · Financial Markets · United States of America · New York City · York City F.C. · New York County, NY · Bill de Blasio · Texas · Sweden · Pierre Andurand · Russia · India · British Petroleum · Rabobank

Oil plunged to its low­est in two weeks on grow­ing fears that a sus­tained re­cov­ery in de­mand is still some way off.

U. S. bench­mark crude fu­tures fell 3.2 per cent. Brent dropped below its 100- day mov­ing av­er­age, while fu­tures in New York fell below the tech­ni­cal level but set­tled above it. New York City’s daily rate of pos­i­tive tests is more than three per cent for the first time in months, and more se­ri­ous ac­tion will be needed to stop the spread, Mayor Bill de Bla­sio said. That’s as global con­firmed deaths from the coro­n­avirus top 1 mil­lion.

“If they were to put new re­stric­tions on ar­eas of New York, that would sur­prise the mar­ket a lit­tle bit and knock it down,” said Michael Hi­ley, head of over- the- counter en­ergy trad­ing at New York­based LPS Fu­tures.

On its se­cond to last day as the front- month, Brent fu­tures for Novem­ber de­liv­ery fell US$ 1.40, or 3.3 per cent, to set­tle at US$ 41.03 a bar­rel, while the more ac­tive Brent con­tract for De­cem­ber fell 3.1 per cent to set­tle at US$41.56.

U. S. West Texas Intermedia­te crude fell US$ 1.31, or 3.2 per cent, to set­tle at US$39.29 per bar­rel.

Mean­while, the cho­rus of down­beat oil de­mand pre­dic­tions con­tin­ued to grow. Three of the world’s big­gest in­de­pen­dent oil traders said con­sump­tion won’t mean­ing­fully re­cover for at least another 18 months. That comes as To­tal SE said de­mand growth will end around 2030 and Pierre An­durand, chief in­vest­ment of­fi­cer and founder of An­durand Cap­i­tal Man­age­ment LLP, called for de­mand to peak in 2026.

Adding to con­cerns over the state of the de­mand re­cov­ery, the mar­ket is con­tend­ing with an in­crease in sup­ply from OPEC+ mem­bers. Rus­sia likely ex­ceeded its OPEC+ quota, com­pound­ing the worry that the group may be adding more sup­ply than the mar­ket can han­dle. U. S. in­ven­tory data Wednes­day will give an up­dated out­look on con­sump­tion. Crude stock­piles are seen higher week- on- week and gaso­line lower, a Bloomberg sur­vey shows.

The sell- off in eq­ui­ties, “which have been prop­ping up oil prices re­cently, is ex­pos­ing the oil mar­kets’ weak fun­da­men­tal back­drop,” said Ryan Fitzmauric­e, com­modi­ties strate­gist at Rabobank. The COVID-19 sit­u­a­tion con­tin­ues to weigh on the mar­ket, as “Europe has seen no­table uptick in virus cases re­cently and even New York has seen cases rise just ahead of the start of the sched­uled in­door din­ing restart to­mor­row.”

Re­fin­ers are be­ing forced into a bal­anc­ing act due to the uneven re­bound in fuel con­sump­tion. In In­dia, pro­ces­sors are im­port­ing gaso­line to cover de­mand as plants run below ca­pac­ity, while in the U. S., re­fin­ers have idled some units to deal with ex­cess diesel sup­ply.

To­tal’s anal­y­sis is more con­ser­va­tive than that of BP Plc, which ear­lier this month said the era of oil- mar­ket growth was al­ready over, but it adds to the cho­rus of ex­ec­u­tives and in­vestors pre­dict­ing rapid change for the in­dus­try.

En­ergy de­mand in­creased in all the sce­nar­ios con­sid­ered in the French en­ergy gi­ant’s En­ergy Out­look re­port pub­lished on Tues­day, but most of the gains were seen be­ing sat­is­fied by low- car­bon power. Elec­tric­ity will com­prise 30 per cent to 40 per cent of fi­nal en­ergy de­mand in 2050, up from 20 per cent to­day, it said.

To­tal and its Euro­pean peers are chan­nelling in­vest­ment into clean en­ergy such as so­lar and wind, bat­tery tech­nol­ogy and car-charg­ing net­works.

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