Oil posts its largest monthly drop since March amid virus

Bloomberg

Oil posted its largest monthly drop since March as renewed lockdown measures to contain the coronavirus threatened to upend a shaky demand recovery.
Futures fall 1.1% in New York to end the week below $36 a barrel taking their cue from a broader market selloff and the worst week for US stocks since March. At the same time, the US posted a record surge in daily coronavirus infections, while new restrictions in Europe could drive the region towards another recession.
A return to tougher lockdown measures will likely deter a substantive rebound in airline demand, with more restrictions in Europe prompting further cuts in airline capacity for the remainder of the year. Still, there’s some support from booming freight markets and improvements in China and India. All the while, traders are looking ahead to next week’s US election and an Opec+ meeting at the end of November.
The concerns over demand come at a time when the Organisation of Petroleum Exporting Countries (Opec) and its allies face a challenge in their efforts to keep supply in check with the faster-than-expected return in Libyan output. Iraq reaffirmed its support for Opec+ oil-production cuts and won’t be seeking any exemption from the curbs next year, Oil Minister Ihsan Abdul-Jabbar said.
Meanwhile, Libya’s daily crude output has reached 800,000 barrels per day and the country is targeting 1.3 million barrels at the beginning 2021, according to Mustafa Sanalla, the chairman of state-run National Oil Corp.
The reopening of the last of Libya’s oil fields and ports has prompted a resurgence of the energy industry, with the Opec nation’s daily production jumping from less than 100,000 barrels in early September.
The National Oil Corp. expects the country to pump 1 million barrels daily next month, Sanalla said. Its ambition to reach 1.6 million by the end of 2021 hinges on the resources the Finance Ministry will allocate to the
company, he said.

Norway’s largest oil field will pump at pre-Covid levels after receiving the government’s permission last month.
The futures curve also continued to weaken. WTI’s front-month contract closed at the deepest discount to its second-month since early September. The spread between the benchmark’s nearest December contracts, a closely watched gauge of market strength, also deepened its contango.
Deteriorating refining margins are spurring refiners to shutter plants or take tentative approaches to reopening facilities as fuel demand remains depressed. Phillips 66 said a restart of its Alliance refinery in south Louisiana in early 2021 depends on market conditions, while in Australia, BP Plc said it will cease fuel production at its Kwinana refinery. Exxon Mobil Corp. sees more pain ahead for the space, saying there are more oil refineries than the world needs and the least-sophisticated plants will continue to shut down.
“The oil refining sector is witnessing some rather abrupt changes in light of the global pandemic and its continued and long-term impact to global travel,” Ryan Fitzmaurice, commodities strategist at Rabobank, said in a note. “Crude import demand to the US and Canada’s east coast is likely to be challenged going forward given the reduction in refining capacity there.”