DTN Oil

WASHINGTON (DTN) -- Nearby delivery New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange began the fourth quarter with losses, erasing day prior gains on increasing concern over global oil demand and rising crude exports from the Organization of the Petroleum Exporting Countries, while pandemic aid negotiations between House Speaker Nancy Pelosi and the White House faltered.

November West Texas Intermediate futures dropped $1.50 to settle at $38.72 barrel (bbl), with the new front-month December Brent contract falling $1.37 to $40.93 bbl. NYMEX November ULSD futures retreated 2.72 cents to a $1.1250 gallon settlement and November RBOB futures erased 2.92 cents in value to settle at $1.1524 gallon.

Previous expectations for a bounce in global oil demand during the fourth quarter have receded this week after heads of global trading houses said they don't expect demand to recover until 2021, while several companies announced layoffs amid business losses caused by the global coronavirus pandemic with more announcements expected in the coming weeks. Fanning those worries was the announcement Madrid, Spain, would go into full lockdown to stem the spread of the disease while Moscow told employers to send at least 30% of their staff home.

In the United States, what have been called last ditch efforts to agree to another relief bill before the Nov. 3 presidential elections stalled, with Pelosi issuing a statement that she spoke with U.S. Treasury Secretary Steven Mnuchin Thursday afternoon but the two remain at odds over key elements of a package. House Democrats are proposing a $2.2 trillion package with the Trump administration proposing $1.5 trillion in new assistance.

Previous relief packages in response to the pandemic's destruction of U.S. economic growth have stimulated the economy, with the Atlanta GDPNow tracker on Thursday signaling the U.S. economy expanded at a 34.6% annualized rate in the third quarter, up 2.6% from Sept. 25.

Oil markets were under pressure early in trading, unnerved by reports of higher crude production from the OPEC+ coalition, with private survey's estimating seaborne exports in September increased to 18.2 million barrels per day (bpd) from 17.53 million bpd in August. Driving exports higher were Libya and Iran, OPEC members excluded from a production agreement, and where production has plunged amid civil war in Libya and U.S. sanctions targeting Iran.

Libya's National Oil Corp. seeks to double production this month to 260,000 bpd and JP Morgan and Goldman Sachs forecast Libya's crude output could hit 500,000 bpd by year end.

The survey also found Iranian production has risen by 120,000 bpd in September as exports increased in defiance of U.S. sanctions. Analysts note Iranian crude production could surge to 1.8 million bpd should sanctions be lifted under a Biden presidency; Biden has promised to reenter the Obama-era Joint Comprehensive Plan of Action.

Liubov Georges can be reached at liubov.georges@dtn.com

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