Oil Down On Demand Worries - Despite More Evidence That Demand Is Recovering

Meanwhile, Libyan output and U.S. rig counts are increasing: File Image/PixaBay

The one-two punch of Covid infection concerns and rising crude supply from Libya once again compelled traders to send oil prices downward on Friday, with both contracts on track for a weekly loss - the first in two weeks.

Adding to their fears was Baker Hughes data showing that U.S. energy companies added five oil rigs to 287, the highest hike since May.

Brent lost 93 cents, or 2.2 percent, at $41.53 per barrel, while West Texas Intermediate shed $1.01, or 2.5 percent, to settle at $39.63.

Earlier in the session it seemed trading had been only minimally affected by the now familiar news of the second wave of Covid causing rising infections rates in Europe and some parts of the U.S. - but then Libya's National Oil Corp said it lifted force majeure on exports from key ports and output would reach 1 million barrels per day (bpd) in four weeks.

Bob Yawger, director of energy futures at Mizuho, said, "As soon as that came out, the market cratered."

As for reports of further government-mandated Covid curfews in France and record new infection rates in Italy, Phil Flynn, senior market analyst at Price Futures Group Inc., remarked, "What's holding us back is the uncertainty about demand - when we're going to get a vaccine, when things are going to get back to normal, concerns about more shutdowns."

Those seeking for more positive news today could take solace form demand continues to rebound for trucking firms such as Girteka Logistics, which on Friday said that despite the pandemic and government intervention, its 7,000 vehicles will deliver about 800,000 full loads this year, up about 10 percent on 2019.

Also, traffic data in the U.K. backed the view that trucking has been healthy in recent weeks: traffic of heavy goods vehicles in Britain over the past two weeks ran on average at 109 percent of the pre-covid level, according to the Department of Transport.