Oil prices fell after a key Libyan oil field resumed production, threatening to release additional volume to a market where demand is already low.
US oil futures fell 3% on Thursday after trading in a narrow range this week. Mesla's oil field and refinery in Sarir in eastern Libya resumed production after production was halted due to a technical problem, Bloomberg reports.
Meanwhile, there has been an increase in the number of cases of global coronavirus and dismissals from Wells Fargo & companies Co. to Walgreens Boots Alliance Inc. diminishes the potential for recovery in demand later this year.
“The global market will have a hard time absorbing these additional Libyan barrels,” said John Kildouff, partner at Energy Capital's New York-based hedge fund Again. At the same time, there will be “tens of thousands of layoffs of people who will be left without work and will not drive a car. Suddenly, there is real emphasis on a potential fall to the bottom due to demand. ”
US benchmark oil recovered after falling below zero in April, but recovery was limited to futures trapped around $ 40 a barrel after near-record high reserves and growth Virus infections across America. In the United States, California, and Texas, one of the largest daily infections and deaths was recorded this week. Goldman Sachs Group Inc. recommended buying Brent futures on West Texas Intermediate as US stocks grew.
However, job losses due to the coronavirus pandemic in the UK accelerated with retailers Walgreens Boots Alliance Inc. and John Lewis, who joined Rolls-Royce Holdings Plc, to detail plans to reduce more than 8,000 employees. Wells Fargo & Co., the largest employer among US banks, is also preparing to cut thousands of jobs since the end of this year.
Complicating the market even further, tankers that stored most of the world's oil as demand declined due to the pandemic begin to unload cargo. According to analyst firm Vortexa Ltd., at key locations outside of Asia, floating reserves have halved to around 35 million barrels since the May peak in May . : ///
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