Oil prices fall on potential Libyan output return, global demand concerns

Oil prices fell on Monday, weakened by the possible return of Libyan production and as rising coronavirus cases stoked worries about global demand, although the market drew support as a tropical storm threatened

to disrupt output in the US Gulf of Mexico.

Brent crude was down $1.21 at $41.94 a barrel by 1346 GMT. US crude fell $1.21 to $39.90 a barrel. Both contracts were set for their biggest daily drops in two weeks.

For more coronavirus news, visit our dedicated page.

Workers at Libya’s major Sharara field have restarted operations, two engineers working there said, after the National Oil Corporation announced a partial lifting of force majeure. But it was unclear when and at what level production might restart.

For all the latest headlines follow our Google News channel online or via the app

Meanwhile, a Suezmax tanker is making its way to Libya’s Marsa El Hariga terminal, according to Refinitiv Eikon shipping data.

“(The) oil market is facing a fork in the road this week when it comes to pricing, and which option it chooses to travel will largely depend on how much real progress will come about in Libya,” BNP Paribas analyst Harry Tchilinguirian said.

Read more:

Some Libya oil facilities restart operations, companies, engineers say

Libya’s Haftar says he will lift oil blockade, while GNA agrees on fair revenue share

Coronavirus: OPEC+ warns of COVID-19 impact, sees signs of decline in oil overhang

Goldman Sachs stuck to its forecast for Brent to reach $49 a barrel by year-end and $65 by the third quarter next year, despite the Libyan developments. Barclays raised its 2020 Brent outlook to $43 a barrel and $53 next year.

Bullish sentiment is underpinned by the hope for improved compliance with an output cut deal among members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

But a rise in coronavirus cases could cut demand.

More than 30.78 million people have been infected by the novel coronavirus, a Reuters tally shows, and British Prime Minister Boris Johnson was on Monday pondering a second national lockdown, while cases in Spain and France have also climbed.

European equities, which often move in tandem with oil, hit their lowest in seven weeks.

Providing a floor for prices, US tropical Storm Beta, the 23rd named storm of this year’s Atlantic hurricane season, moved ashore threatening production.