(Bloomberg) -- Oil plunged to its lowest in two weeks on growing fears that a sustained recovery in demand is still some way off.U.S. benchmark crude futures fell 3.2%. Brent dropped below its 100-day moving average, while futures in New York fell below the technical level but settled above it. New York City’s daily rate of positive tests is more than 3% for the first time in months, and more serious action will be needed to stop the spread, Mayor Bill de Blasio said. That’s as global confirmed deaths from the coronavirus top 1 million.“If they were to put new restrictions on areas of New York, that would surprise the market a little bit and knock it down,” said Michael Hiley, head of over-the-counter energy trading at New York-based LPS Futures.Meanwhile, the chorus of downbeat oil demand predictions continued to grow. Three of the world’s biggest independent oil traders said consumption won’t meaningfully recover for at least another 18 months. That comes as Total SE said demand growth will end around 2030 and Pierre Andurand, chief investment officer and founder of Andurand Capital Management LLP, called for demand to peak in 2026.Adding to concerns over the state of the demand recovery, the market is contending with an increase in supply from OPEC+ members. Russia likely exceeded its OPEC+ quota, compounding the worry that the group may be adding more supply than the market can handle. U.S. inventory data Wednesday will give an updated outlook on consumption. Crude stockpiles are seen higher week-on-week and gasoline lower, a Bloomberg survey shows.The sell-off in equities, “which have been propping up oil prices recently, is exposing the oil markets’ weak fundamental backdrop,” said Ryan Fitzmaurice, commodities strategist at Rabobank. The Covid-19 situation continues to weigh on the market, as “Europe has seen notable uptick in virus cases recently and even New York has seen cases rise just ahead of the start of the scheduled indoor dining restart tomorrow.”Refiners are being forced into a balancing act due to the uneven rebound in fuel consumption. In India, processors are importing gasoline to cover demand as plants run below capacity, while in the U.S., refiners have idled some units to deal with excess diesel supply.The refining margin for combined gasoline and diesel resumed its trek lower on Tuesday after recovering in recent sessions. The so-called crack remains below $10 a barrel at its lowest seasonal level since 2010.“It’s a very difficult situation for refiners,” said Stewart Glickman, energy equity analyst at CFRA Research. “The crack spreads aren’t great, utilization is low” and they’re “operating under more uncertainty than usual with how long it’s going to take before pre-pandemic levels get back.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Venezuela’s dwindling oil exports were dealt another blow as one of India’s top refiners plans to buy Canadian supplies on concern that the U.S. is poised to step up sanctions against Caracas.Reliance Industries Ltd, owner of the world’s largest refining complex, signed a deal to purchase Canadian crude for the next six months, according to people familiar with the situation, who spoke on condition of anonymity. Reliance will get 2 million barrels of heavy Canadian oil a month, loading from the port of Beaumont in Texas, they said.While U.S. sanctions have all but crippled Venezuela’s oil export trade, so-called crude-for-diesel swaps have been allowed up until now for humanitarian reasons to allow power plants and agriculture to operate. Reliance’s decision to buy Canadian crude may be a sign that it doesn’t expect that situation to last much longer. The company didn’t immediately reply to an emailed request for comment.The Trump administration is zeroing in on the diesel swaps because it’s running out of options to pressure the regime of President Nicolas Maduro, according to Scott Modell, managing director of Rapidan Energy Group. “The White House would like to galvanize the Venezuelan street and undermine the legislative elections on December 6,” he said.Venezuela is the third-largest supplier of oil to the Indian refiner and accounted for 14% of the oil processed at the Jamnagar refining complex this year. Reliance had recently stepped up purchases of oil from Caracas and lifted 11.6 million barrels this month, double the volumes seen in August and the most since March 2016.U.S. special envoy to Venezuela and Iran Elliott Abrams said recently that sanctions on Venezuela convinced Russia and China not to sell gasoline to Caracas and alluded to possible “snap back” sanctions in the coming days.Ending these swaps may bring the Maduro regime closer to the brink as diesel shortages could worsen power outages. Spontaneous protests have broken out in recent weeks over demands for fuel, cooking gas and basic services, according to the local NGO Venezuelan Social Conflict Observatory.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Oil prices tumbled on Tuesday morning as sentiment shifted due to an increasing amount of uncertainty surrounding the second wave of COVID-19