NEW YORK – Oil prices settled about 3% lower 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 settled down $1.13, or 2.6%, to $41.72 a barrel. U.S. West Texas Intermediate ended 2.9%, or $1.17, lower at $39.43.
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.
“It’s a large chunk of production to come online when you don’t need any of those barrels, which is bad news for the supply side of the equation” said Bob Yawger, director of energy futures at Mizuho in New York.
Hurricane Delta, which inflicted the biggest blow in 15 years to energy production in the U.S. Gulf of Mexico last week, was downgraded to a post-tropical cyclone at the weekend.
Workers headed back to production platforms on Sunday and French oil major Total TOTF.PA restarted its 225,500 barrel per day Port Arthur refinery in Texas.
The Louisiana Offshore Oil Port (LOOP) on Monday said it has resumed operations at its offshore Marine Terminal and there are no interruptions in deliveries at the Clovelly Hub.
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%.
Prices were also pressured by a jump in new COVID-19 cases, which has raised the spectre of more lockdowns which could dampen demand for oil.
Infections are at record levels in the U.S. Midwest. In Europe, British Prime Minister Boris Johnson announced new coronavirus lockdown measures and Italy is preparing fresh nationwide restrictions.