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Bloomberg

Oil Falls Back to $40 With Aviation Slump Adding to Demand Woes

(Bloomberg) — Oil headed lower after capping its first monthly loss since April as a drop in commercial flights added to a worsening demand outlook.Futures in New York fell to near $40 a barrel after losing 5.6% in September. 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. The data comes after several top trading houses said a meaningful recovery in oil demand may take as long as 18 months to two years.See also: The Global Economic Recovery Has Slowed From a Bounce to a GrindAmerican benchmark crude prices rallied 2.4% on Wednesday, the most in two weeks, following an Energy Information Administration report that showed domestic crude inventories declined by almost 2 million barrels last week to the lowest level since April. Distillates stockpiles also posted a surprise drop.The energy demand outlook is deteriorating as some European governments are being forced to reimpose lockdown-type measures to rein in a resurgent coronavirus, while in the U.S. the chance of more fiscal stimulus before the election in November appears to be fading. There’s also downward price pressure coming from the supply side, with Libyan crude output almost quadrupling over the past month.Libya opened its Sarir oil field on Tuesday and total output has reached about 300,000 barrels a day, up from 80,000 at the start of September. Meanwhile, in a rare positive for oil prices, a strike at Norway’s biggest oil field could disrupt more than a quarter of the country’s crude production.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.

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