Oil Dips On Libyan Output Recovery, Lockdown Worries

Meanwhile, China becomes the first economy to recover form the pandemic: File Image/PixaBay

Libya significantly boosting its crude output was cause for trading concern on Monday along with demand worries stemming from some European governments tightening Covid lockdown restrictions - and as a result, oil prices dipped slightly.

Brent fell 31 cents to settle at $42.62 per barrel, while West Texas Intermediate fell 5 cents to settle at $40.83 per barrel.

According to engineers, Libya's Abu Attifel oilfield is expected to restart operations on October 24, which could add as much as 70,000 barrels per day (bpd) to an already shaky world market.

However, this was countered by promising news on several fronts, including three sources at an Organization of the Petroleum Exporting Countries (OPEC) ministerial monitoring committee meeting on Monday saying a planned output increase from January could be reversed if necessary: prince Abdulaziz bin Salman, energy minister for Saudi Arabia, said, "We will not dodge our responsibilities in this regard."

There was also cautious optimism expressed by Washington politicians about the prospect of passing of a new coronavirus stimulus bill - which pundits believe will be a support to business and demand - and presumably also buoying analytical sentiment was a report on Monday that China's economy grew 4.9 percent between July and September, making it the first major world power to recover from the pandemic.

But there was economic concern for other regions Monday, with the International Monetary Fund report released Monday predicting a 4.1 percent contraction for economic recovery in the Middle East and central Asia; it also predicted anemic prices for oil in 2021, in the $40 to $50 range.

Jihad Azour, director of the IMF's Middle East and Central Asia department, said, "I think what is important for the region going forward is we have now a situation where it's clear that diversifying the economy is the best way to get out of this crisis."