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UPDATE 4-Oil prices fall as supply concerns ease

Mon, 12th Oct 2020 04:55

* Force majeure lifted at Libya's Sharara oilfield

* Hurricane Delta downgraded on Sunday

* Norway oil strike ended on Friday
(Updates prices)

By Bozorgmehr Sharafedin

LONDON, Oct 12 (Reuters) - Oil prices fell on Monday as
force majeure at Libya's largest oilfield was lifted, a
Norwegian strike affecting production ended and U.S. producers
began restoring output after Hurricane Delta.

Brent crude fell 52 cents, or 1.2%, to $42.33 a
barrel by 1052 GMT and U.S. West Texas Intermediate was
down 58 cents, or 1.4%, at $40.02.

"It's all about ending production disruptions ... (which)
are not helpful in a period with ongoing demand concerns," said
UBS oil analyst Giovanni Staunovo.

Production in Libya, a member of the Organization of the
Petroleum Exporting Countries (OPEC), is expected to rise to
355,000 barrels per day (bpd) after force majeure at the Sharara
oilfield was lifted on Sunday.

Rising Libyan output will pose a challenge to OPEC+ - a
group comprising OPEC and allies including Russia - and its
efforts to curb supply to support prices.

"If oil demand recovery continues to struggle due to new or
stricter COVID-related mitigation measures, the (OPEC+) producer
group may need to reconsider the planned tapering of their
voluntary supply cuts," said BNP Paribas analyst Harry
Tchilinguirian.

Front-month prices for both contracts gained more than 9%
last week in the biggest weekly rise for Brent since June. But
both fell on Friday after Norwegian oil companies struck a deal
with labour union officials to end a strike that had threatened
to cut the country's oil and gas output by close to 25%.

Hurricane Delta, which dealt the greatest blow to U.S. Gulf
of Mexico energy production in 15 years, was downgraded to a
post-tropical cyclone at the weekend.

Workers headed back to production platforms on Sunday and
French oil major Total was working to restart its
225,500 barrel per day Port Arthur refinery in Texas.

Prices were also pressured by a jump in new COVID-19 cases,
which has raised the spectre of more lockdowns.

Infections are at record levels in the U.S. Midwest and in
Britain Prime Minister Boris Johnson is expected to announce new
measures on Monday while Italy is preparing fresh nationwide
restrictions.

Goldman Sachs, meanwhile, said that the outcome of the U.S.
presidential election would not impact its bullish oil and
natural gas outlook and that an overwhelming Democratic victory
could be a positive catalyst for these sectors.
(Reporting by Bozorgmehr Sharafedin in London
Additional reporting by Florence Tan in Singapore
Editing by Jason Neely and David Goodman
)

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