Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
Vladimir Zernov
Crude Oil

Oil Video 21.09.20.


Oil Is Under Serious Pressure Amid Concerns About Sustainability Of Demand Recovery

WTI oil slipped below the $40 level and gained additional downside momentum amid worries about a second wave of lockdowns in Europe. The situation is very tense in France, Spain and UK.

Today, UK health officials were speaking about the current situation with COVID-19 in the country but mostly avoided the topic of a new nationwide lockdown.

That said, they have already stated that pubs and restaurants might soon face additional restrictions, and the market clearly wonders who will be next in the line.

A second wave of lockdowns in Europe will present a very bearish scenario for oil. The European economy has not recovered from the first wave of the virus, and a second wave of lockdowns can send it into a true depression.

While the world central banks have managed to support a robust recovery by slashing interest rates to zero and provided huge monetary stimulus, there’s little they will be able to do in case of a second wave of lockdowns. In this scenario, demand for oil may take a big hit from reduced mobility and the related economic shock.

Libya’s Production Is Set To Come Back To The Market

Libyan National Army General Haftar announced that his troops would end a blockade of Libya’s oil ports, providing the country with the opportunity to export oil.

Libya’s oil production was about 1.2 million barrels per day (bpd) at the beginning of the year but declined to 100,000 bpd due to the blockade. Torn by a civil war, Libya needs revenue from oil exports so it will try to boost its oil production as fast as possible.

This year, Libya tried to increase production but its attempts failed due to political difficulties. This time, it looks like both sides of the conflict may be financially exhausted so Libya’s chances to increase its oil exports look better.

If this happens, OPEC+ will likely have to find additional ways to support the market. Libya is exempted from the production cut deal due to the civil war, so the market may face an increase in production at a time when demand remains under pressure due to the second wave of the virus. In this scenario, inventories will start to increase, putting serious pressure on oil prices.

For a look at all of today’s economic events, check out our economic calendar.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.