Oil drops to 3-week low on fears of Covid-19 second wave

Oil prices fell on Monday, for the second straight day, and hit a 3-week low, amid demand concerns due to the second wave of the coronavirus, in addition to rising Libyan output, and the US increase of its drilling and exploration activities.

US crude fell 3.2% to the lowest level since October 5 at $38.44 a barrel, after opening at $39.72, and hit a session-high of $39.72, and Brent fell 2.75% to the lowest since October 5 at $40.38, after opening at $41.52, and hit a high $41.60. 

US crude lost 2.1% on Friday, and Brent futures lost 1.75%, the second daily loss in 3 due to global demand concerns.

Oil prices lost 2.5% during the last week, posting the first weekly loss in 3 weeks, as the global demand concerns offset OPEC-Plus' pledge to support the market.

The US reported the highest number so far of new Covid-19 infections in two days on Saturday, and new cases in France rose to over 50,000 cases per day on Sunday.

The Spanish government declared a new state of emergency, and Italy ordered restaurants and bars to be closed by 6 pm.

These developments are indicators of the second wave spread, which threatens any fuel demand recovery.

The National Oil Corporation in Libya ended the oil port blockade, and said that production will reach 1 million barrels per day within a month, which is faster than expected.

Daily production in Libya jumped to about 500 thousand barrels per day, and expectations indicate that production will double by the end of the year, after the receding of the armed military conflict in the country.

Baker Hughes revealed on Friday that the US oil drilling rigs count rose 6 rigs, marking the fifth straight weekly increase.

The total operating rigs in shale oil fields rose to 211, the highest level since the week ending May 29.

The US production jumped over 47% to its all-time high at 13.1 million barrels per day since mid-2016, but following the coronavirus pandemic it stabilized around 11 bpd, which makes the US the world's largest oil producer.