Oil falls about 2% on Libyan crude output, coronavirus demand concerns

Oil fell nearly 2 per cent on Friday, finishing lower for the week, in anticipation of a surge in Libyan crude supply and demand concerns caused by surging coronavirus cases in the United States and Europe.

Crude prices sank after Libya's National Oil Corp (NOC) said it lifted force majeure on exports from key ports and output would reach 1 million barrels per day in four weeks.

"As soon as that came out, the market cratered," said Bob Yawger, director of energy futures at Mizuho in New York.

US crude settled at $39.85 a barrel, falling 79 cents, or 1.9 per cent. Brent crude settled at $41.77 a barrel, losing 69 cents, or 1.6 per cent. For the week, US crude futures lost 2.5 per cent and Brent futures shed 2.7 per cent.

Italy and several US states reported record daily increases in infections, while France extended curfews for about two-thirds of its population as the second wave of the Covid-19 pandemic sweeps across Europe.

"What's holding us back is the uncertainty about demand - when we're going to get a vaccine, when things are going to get back to normal, concerns about more shutdowns," said Phil Flynn, senior analyst at Price Futures Group in Chicago.

Russian President Vladimir Putin on Thursday said Moscow did not rule out extending OPEC+ oil output cuts, but that assurance did not offset the expectations for rising Libyan output and demand worries, analysts said.

"They need to say, 'We are not going to bring back those two million barrels,'" Yawger said.

OPEC+, which includes Russia and the Organization of the Petroleum Exporting Countries, is due to increase production by 2 million bpd in January 2021.US energy companies added five oil rigs to raise the total rig count to 287 in the week to Oct. 23, the highest since May, energy services firm Baker Hughes Co said. The rig count is an indicator of future supply.