Oil prices slip amid over-supply worries

Andrew Cummings
January 24, 2020

The last week registered 1.9 million barrels of loss in the total inventories for commercial petroleum.

"I see an abundance of energy supply in terms of oil and gas", the head of the IEA, Fatih Birol, told the Reuters Global Markets Forum on Tuesday, while attending the World Economic Forum meeting in Davos.

Unless oil services come back to operation rapidly, OPEC associate Libya's crude production will fall to almost 72,000.1 barrel per day from almost 1.2 million barrel per day previously.

"Oil prices remain heavy on oversupply concerns and after the Saudi Energy Minister Price Abdulaziz did not offer any hints of optimism that the OPEC+ production cuts would be extended beyond March", said Edward Moya, senior market analyst at OANDA in NY. Additionally, more than 540 cases of the new virus have been confirmed and authorities in Wuhan have shut transportation networks and are urging residents not to leave to help prevent the contagion spreading.

Should the new virus develop dramatically and hit travel and growth, demand for oil could fall by 260,000 bpd, Goldman Sachs said in a note.

Libya's state-owned National Oil Corporation (NOC) on Saturday declared a state of force majeure in oil ports, accusing the east-based army of closing the ports.

"Shutdown of all affected oil fields will result in a loss of crude oil production of 1.2 million b/d and daily financial losses of approximately $77 million", Libya's National Oil Corporation (NOC) said on Monday, confirming that almost all of the OPEC member's production will be lost due to the blockade.

The Libyan pipeline obstruction had a continuous silent influence on emotion. Weekly U.S. energy reports have been delayed a day this week in observance of the Martin Luther King Jr. "There is a consensus that the disruption will prove short-lived", said Stephen Brennock of oil broker PVM.

Oil prices sank on Wednesday amid growing concerns over a potential oversupply of crude.

US crude oil and distillate inventories fell last week while gasoline stockpiles grew for an 11th consecutive week to an all-time high, the Energy Information Administration said on Thursday.

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