Oil steady with US hurricane threat offset by virus resurgence

[NEW YORK] Oil was steady after a third straight weekly gain as the threat of back-to-back storms hitting the US Gulf Coast and disrupting production was offset by signs of a coronavirus resurgence in parts of Asia and Europe.

October futures traded near US$42.50 a barrel in New York after falling 1.1 per cent on Friday. Almost 60 per cent of crude output in the US Gulf of Mexico production was closed as of midday Sunday as the region prepared for two approaching hurricanes. The systems - Marco and Laura - are coming from different directions and have the potential to cause billions of dollars in damage.

Governments around the world, meanwhile, continue to tread a fine line between trying to halt the spread of Covid-19 and efforts to re-open their economies. While the pandemic is showing signs of stabilisation in the US, it appears to be staging a comeback in Europe and Asia.

US benchmark crude futures have been rising - albeit very gradually - this month amid a steady decline in domestic crude and gasoline supplies, and tentative signs that demand is returning. That's starting to encourage the return of production, however, with drillers in the Permian Basin of West Texas and New Mexico putting an additional 10 rigs to work last week for the biggest jump in activity this year.

Libya's National Oil Corp said Friday that it welcomed the country's new cease-fire agreement and the nation should be able to resume exports when all of its facilities are freed from military occupation, potentially unleashing even more new supply at a time when the Opec+ alliance is easing output curbs.

BLOOMBERG