“We have supply coming back to the market, while there is still plenty of concern over demand, with the flaring up in Covid-19 cases in parts of Europe,” said Warren Patterson, head of commodities strategy at ING Bank NV in Singapore. With Libya coming back, the market is close to balance, but it will depend on demand assumptions, he said.West Texas Intermediate for November delivery fell 0.8% to $40.28 a barrel on the New York Mercantile Exchange at 10:14 a.m.
Brent’s six-month timespread was $2.08 a barrel in contango — where prompt prices are cheaper than later-dated ones — compared with $1.95 on Friday. The change in the market structure indicates concern about over-supply has increased slightly. Iraq expects crude prices to remain at around $41 to $42 a barrel this year before rising to $45 in the first quarter of 2021, the state-run Al-Sabah newspaper reported, citing an interview with Oil Minister Ihsan Abdul Jabbar. The minister reiterated that Iraq, OPEC’s second-biggest oil producer, would continue to comply with the OPEC+ pact to curb output.
Drilling activity in the U.S., the world’s largest producer, is starting to pick up despite signs demand might not recover to pre-virus levels until 2022 or 2023. Active rigs targeting crude oil rose by 4 to 193 last week, according to Baker Hughes, an increase of 14 in the last three weeks.Saudi Aramco gave full contractual crude oil supply to at least five refiners in Asia for November sales, according to refinery officials with knowledge of their procurement operations.
Crude futures fell 0.8% to 262.4 yuan a barrel on the Shanghai International Energy Exchange after jumping 3.9% on Friday as trading resumed after public holidays.