Crude-oil futures traded lower Monday, under pressure as Libya lifted force majeure at its largest oil field, producers began restoring output in the Gulf of Mexico following Hurricane Delta and the end of a strike by Norwegian oil workers.
West Texas Intermediate crude for November delivery
fell 55 cents, or 1.4%, to $40.05 a barrel on the New York Mercantile Exchange. December Brent crude
was down 54 cents, or 1.3%, at $42.31 a barrel on ICE Futures Europe. WTI, the U.S. benchmark, rose nearly 10% last week, while Brent, the global benchmark, rose 9.1%.
With the passing of the hurricane and the resolution of the strike in Norway, “investors are more concerned about the higher output in the face of subdued demand,” said Mihir Kapadia, chief executive of Sun Global Investments. “However, more disruptions in the Gulf are likely in the coming weeks as the hurricane season continues. This could see prices increase again as workers will be expected to halt production during this time. ”
Hurricane Delta hit Louisiana as a Category 2 storm with sustained winds of over 100 miles an hour on Friday. The Bureau of Safety and Environmental Enforcement estimated Sunday that 91.01% of current oil output in the Gulf of Mexico had been shut in due to the storm, along with 62.15% of natural-gas production.
Norwegian oil producers and workers reached a wage deal on Friday, ending a strike that had curtailed output in the North Sea by more than 300,000 barrels a day and had threatened to further weigh on production this week.
Libya’s state-owned National Oil Co. on Sunday said it had lifted force majeure at Sharara, its largest oil field, after a military commander lifted a monthslong blockade. NOC didn’t disclose the current level of output at Sharara, which has a capacity of around 300,000 barrels a day, according to S&P Global Platts.
Bloomberg, citing a person with knowledge of the situation, reported that the field will initially pump 40,000 barrels of crude a day, reaching its capacity of almost 300,000 barrels a day next week. That would roughly double Libya’s output and complicate efforts by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to manage supply in the face of demand curtailed by the COVID-19 pandemic.