NYMEX crude oil and Brent crude oil rose by 3.13% and 3.64% respectively. The latest news on Trumps health eased political uncertainty in global markets and encouraged oil prices to rise.
On Monday, Norwegian workers extended their strike, offsetting signs of increased oil supply and supporting oil prices. According to the Norwegian oil and gas Federation, the strike could cut Norways production by up to 330000 barrels of oil equivalent a day, or 8% of its total output.
But the market is still shrouded in conflicting information. Oil prices plummeted more than 4% on Friday (October 2), while oil prices hit a new low of $38.79/barrel since June 15, adding to concerns that an increase in the number of new cases may weaken the global economic recovery.
Opinion polls show that Trumps approval rating is 10 percentage points lower than Bidens; about 65% of Americans believe that if trump had taken the new coronavirus more seriously, he could have been immune. Investors are also worried that the U.S. fiscal stimulus plan will not be pushed forward, which will not help restore oil demand.
OPEC Libyas oil production capacity nearly tripled last week to 270000 B / d. The National Front in the east of the country has lifted its eight month blockade of the countrys oil production facilities.
If Libya increases production by another 500000 B / D, even a very fragile supply deficit in the market will not emerge, said Howie Lee, an economist at OCBC This could extend the time it takes for inventory to fall, he added.
In the past few months, a sharp rebound in oil prices has prompted us energy companies to resume drilling. According to data released by Baker Hughes, an oil service company, on Friday, US oil companies have increased oil and gas drilling platforms for the first time in three consecutive weeks since October 2018.
In a report on October 2, JPMorgan analysts said that the increase in oil supply and the slowdown in demand could bring the average price of Brent crude oil to $41 / barrel in the fourth quarter. OPEC +, as well as partners such as Russia, may be forced to make new production cuts at their November meeting.
Limited refinery demand in the United States
However, in an effort to absorb the excess diesel stocks accumulated in the second quarter of 2020, US refineries continue to restrict crude oil processing and deploy their equipment to maximize gasoline production. In the past four weeks, US refineries have cut crude processing capacity by nearly 19% to below the five-year average, while supply to the domestic market has fallen by 13%.
If they are able to maintain such progress, US refineries should be able to bring diesel and other middle distillate stocks close to normal levels in the first quarter of 2021 and resume normal refining activities in the second or third quarter of 2021.