27.10.202013:07 Forex Analysis & Reviews: Oil prices continue to decline amid rising COVID-19 incidence around the world

Due to another spread of COVID-19 in Europe, leaders of many European countries have imposed travel and leisure restrictions. For example, bars, restaurants and nightlife venues closed much earlier than usual in Italy and Spain last week.

However, such a resumption and tightening of quarantine measures could affect the demand for gasoline and other fuels, limiting their consumption, which will slow down the recovery of oil prices. In addition to that, the situation in the United States is no less deplorable, especially since the daily incidence in the country has exceeded 60,000 on Sunday. If the pandemic continues to spread actively in the coming days, oil consumption will inevitably drop further down.

Experts have long announced a persistent negative trend in the oil market, on which the forecasts do not contain any hint of an improvement in the situation. They predicted that oil consumption will only amount 9.6 million barrels per day this year, which is about 10% lower than in 2019. The current slowdown in the growth rate of the EU economy is also limiting the sale of certain types of industrial fuels.

Aside from that, the news that Libya has increased oil production also put serious pressure on oil prices. In September, the government in Tripoli and the head of the Libyan National Army, Khalifa Haftar, signed an agreement under which the nine-month oil blockade in the country was lifted.

Since then, oil production has grown rapidly, and last Friday, the Libyan National Oil Company (NOC) even said that production will increase to 800,000 barrels per day within two weeks, and in four weeks, will rise to 1 million barrels per day.

Libyan oil, which is a worthy competitor to crude, is also expected to create difficulties for the Brent oil market.

This active recovery of production also complicates the rebalancing of the market. Thus, the previously planned increase in production by the OPEC and its allies, which was supposed to be carried out this coming January, may be postponed.

Tropical storm Zeta, which at one time caused a reduction in oil production on offshore platforms in the Gulf of Mexico, also failed to support oil prices.

As a result, WTI futures for December delivery decreased by 3.34% and traded at $ 38.52 per barrel on the New York Mercantile Exchange, and on Tuesday morning, found support at $ 38.29 and resistance at $ 41.59.

The USD index, on the other hand, increased by 0.30% and traded at $ 93,040.

Meanwhile, Brent futures for January delivery fell by 3.07% and amounted to $ 40.78 a barrel.