(Bloomberg) -- Oil fell below $40 a barrel with a challenged demand outlook and higher supplies from OPEC+.
As the coronavirus continues to spread, there are ominous signs for consumption. A 7-day moving average of worldwide commercial flights declined to the lowest since mid-August, according to Flightradar24, a website that tracks flights in real time, while U.K. car usage slumped last week amid new virus restrictions. Europe’s oil refineries are struggling to cope with a diesel glut, limiting their prospects for extra crude buying.
As oil oscillates around $40, there’s also downward price pressure coming from the supply side, with Libyan output being restored and Russian exports expected to increase. The North African country is now pumping around 300,000 barrels a day, up from 80,000 at the start of last month. September data also show higher oil exports from Saudi Arabia and Iraq.
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“The oil market is paring some of yesterday’s gains amid signs of rising OPEC+ supply,” said Tamas Varga, analyst at PVM Oil Associates. “This upswing in global oil supply comes amid lingering demand concerns.”
Crude’s slump comes despite more positive sentiment in broader markets. Earlier in the day prices had gained with equities as the prospects of a fresh fiscal-stimulus package grow in the U.S.
As the market has stabilized in recent weeks, so have speculative flows into crude. Eleven of the largest ETFs in the market together withdrew $293 million in September, according to data compiled by Bloomberg. Though that’s a fourth consecutive month of outflows, it’s also the smallest of the four.
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