OIL FUTURES: Crude settles lower as COVID-19 surge threatens demand outlooks

Oil futures settled lower Oct. 26 as demand outlooks came under pressure amid a surge in COVID-19 cases in the US and Europe.

NYMEX December WTI settled $1.29 lower at $38.56/b, and ICE December Brent was down $1.31 at $40.46/b.

Front-month WTI last settled lower Oct. 2.

Oil demand outlooks have dimmed as a return to broader social lockdowns appear more likely amid steadily rising coronavirus infections.

In the US, the seven-day moving average of new infections climbed to 68,954 on Oct. 25, an all-time high, according to data from The COVID Tracking Project.

In Europe, Italy has encouraged people to avoid travel before Nov. 24, Spain has approved a state of emergency and imposed a national nighttime curfew, and France has recorded more new cases in the last three days than it registered during its March-May lockdown.

NYMEX November RBOB settled down 2.73 cents on Oct. 26 at $1.1116/gal, and November ULSD was 2.95 cents lower at $1.1218/gal.

The ICE New York Harbor front-month RBOB crack versus Brent was holding at around $5.60/b midafternoon, up slightly from the previous session but still near six-week lows.

"Crude prices continue to slide as surging coronavirus cases in both Europe and the Americas will trigger lockdowns that will cripple economic activity and downgrade crude demand forecasts," OANDA senior market analyst Edward Moya said. "It is hard to get optimistic about the crude demand outlook due to COVID-19."

Against this backdrop, rising Libyan crude output added further pressure to prices.

At the end of last week, Libya's National Oil Corp. said production would reach 800,000 b/d in two weeks and 1 million b/d within four weeks, as the company lifted force majeure on loadings from two of its largest export terminals.

On Oct. 26, the state-owned company resumed production at its El Feel oil field, the last of its idled facilities, marking the end of a 10-month interruption in exports.

Libya was Africa's fourth-largest crude producer in 2019, but in January the self-styled Libyan National Army led a port blockade as it battled against the country's UN-backed Government of National Accord.

Gulf Coast braces for Zeta

Top producers in the deepwater Gulf of Mexico said they have already started evacuating oil and gas platforms and shutting in production ahead of Hurricane Zeta, which is expected to trigger more oil and gas volumes to come offline.

Nearly 16% of oil volumes from the US Gulf already are shut in, 293,656 b/d turned off, and about 6% of natural gas output, 162.57 MMcf/d, is offline, according to the US Bureau of Safety and Environmental Enforcement.

Only 10 platforms have been evacuated thus far, BSEE said Oct. 26, with more underway.

BP and Equinor confirmed they are shutting in production on their platforms, while Chevron, BHP and others said they are evacuating some personnel and considering decisions on production reductions.