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James Hyerczyk
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WTI and Brent Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher late in the session on Thursday, pressured by rising coronavirus cases in India and Japan, and an unexpected rise in U.S. oil stockpiles. A stronger U.S. Dollar is also weighing on the dollar-denominated commodity. Perhaps helping to limit losses were concern over lower crude production in Libya.

At 18:21 GMT, June WTI crude oil futures are trading $61.08, down $0.27 or -0.44% and June Brent crude oil is at $65.06, down $0.26 or -0.40%.

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Energy Demand Concerns

India, the world’s third-largest oil user, on Thursday reported the world’s highest daily increase to date with 314,835 new coronavirus cases.

Indian Oil Corp Ltd’s (IOC) refineries are operating at about 95% of their capacity, down from 100% at the same time last month, two sources familiar with the matter told Reuters.

Japan, the world’s No. 4 oil importer, is expected to announce a third wave of lockdowns affecting Tokyo and three wester prefectures, media reported.

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Firm US Dollar Weighs on Foreign Demand

The U.S. Dollar is trading higher against a basket of currencies late in the session on Thursday, pressuring foreign demand for dollar-denominated crude oil. The dollar is being supported at times by steady-to-higher U.S. Treasury yields. However, a plunge in the Euro is exerting the most upside pressure on the greenback.

Iran, World Powers Negotiations

Adding to the bearish sentiment was the progress on negotiations between Iran and world powers to resurrect the 2015 nuclear accord. Analysts have said Iran has the potential to provide about 1-2 million barrels per day (bpd) in additional oil supply if a deal is struck.

Lower Libyan Crude Production Supportive

Libya’s oil production has declined from 1.3 billion barrels to 1 million per day due to rising debts, the head of the country’s National Oil Corporation (NOC) said on Thursday.

Production may fall further as oil companies are unable to work under mounting debts, according to NOC chief Mustafa Sanallah.

The reason for the burgeoning debt is the reduction in budget allocation for public oil companies in Libya, the official said.

“We have the capacity to raise the daily production of oil to more than 2 million barrels in the coming period, but not allocating budgets has prevented us from reaching that level,” Sanallah said.

He urged Libya’s Oil Ministry to help resolve the budget issue, warning that production could go further down.

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

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