Oil holds steady; traders look to U.S. stimulus talks for hope

By Laila Kearney NEW YORK (Reuters) - Oil was little changed on Tuesday, pressured by the threat to demand from rising coronavirus cases worldwide and increased Libyan output, though traders said talk of a U.S. stimulus package was supporting markets. Brent crude futures fell 3 cents to $42.59 a barrel by 11:55 a.m

Reuters October 21, 2020 00:05:47 IST
Oil holds steady; traders look to U.S. stimulus talks for hope

Oil holds steady traders look to US stimulus talks for hope

By Laila Kearney

NEW YORK (Reuters) - Oil was little changed on Tuesday, pressured by the threat to demand from rising coronavirus cases worldwide and increased Libyan output, though traders said talk of a U.S. stimulus package was supporting markets.

Brent crude futures fell 3 cents to $42.59 a barrel by 11:55 a.m. EDT (1555 GMT).

November U.S. West Texas Intermediate (WTI) crude futures fell 4 cents to $40.79. The more active December contract was also down 4 cents at $41.02.

Investors are following negotiations between U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over another U.S. coronavirus aid package, said John Kilduff, partner at Again Capital in New York.

"If we get a deal, I think that would be supportive, and if we don't get a deal, I think that's going to be somewhat punishing for prices," Kilduff said.

While the U.S. House, led by Pelosi, could potentially pass a bill, the Republican-controlled U.S. Senate is less inclined to agree to bill with a high price tag, hampering the possibility of stimulus.

The rebound in COVID-19 cases in Europe and North America that has sparked renewed lockdown measures is weighing on oil prices, Kilduff said.

"It undermines sentiment, it undermines economic activity, it undermines demand," he said.

A ministerial panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, pledged on Monday to support the market.

However, those countries plan on scaling back the size of its production cuts in January from a current 7.7 million barrels per day (bpd) to roughly 5.7 million bpd in January.

OPEC member Libya, which is exempt from the cuts, is also ramping up production after armed conflict shut almost all of the country's output in January, pumping more oil into an oversupplied market.

Output from its biggest field, Sharara, resumed on Oct. 11 and is now at about 150,000 bpd, about half its capacity, two industry sources told Reuters.

Another 70,000 bpd oilfield is expected to restart on Oct. 24.

(Additonal reporting by Ahmad Ghaddar in London, Sonali Paul in Melbourne and Roslan Khasawneh in Singapore; Editing by Marguerita Choy and Jason Neely)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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