Monday , October 26 2020

Oil holds near $40 with stock markets rising


Oil held near $40 a barrel in New York as positive European manufacturing data and rising equity markets gave some respite to demand worries.
Futures edged higher, buoyed by stronger-than-expected manufacturing figures from Germany, while S&P 500 futures advanced with European equities. Citigroup Inc. said it remains bullish on the outlook for oil, though the market is undergoing a fitful rebalancing.
In the US, data from the American Petroleum Institute showed gasoline inventories shrink by 7.7 million barrels last week, according to people familiar with the matter. It also showed crude stockpiles increased by almost 700,000 barrels, though a Bloomberg survey estimates a decline.
After a partial recovery this month, oil prices are now back in the same range as during the northern hemisphere’s summer. With prospects for demand deteriorating in recent weeks, attention is now turning to the Opec+ alliance and whether it will try to curb output further to rebalance the market.
“The API was positive I’d say, with draws in gasoline and distillates” and crude little changed, said Bjarne Schieldrop, chief commodities analyst at SEB AB. “A large drawdown in the fourth quarter or not is the big question.”
In the near term, the demand outlook looks troubled. In Europe, the profit from turning crude into diesel slipped toward $2 a barrel earlier, a record low in data going back to 2011. That curbs demand for crude from refineries. The head of Russia’s Gazprom Neft PJSC said that the recovery in global oil consumption has indeed slowed down.
On the US Gulf Coast, Tropical Depression Beta has flooded Houston, but is weakening as it heads towards Louisiana. The storm isn’t expected to cause many issues for onshore refineries, and interruptions to offshore rigs aren’t likely to be long-lasting either.

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