A Rebound In The Epidemic And Downside Risks To The Economy Limit Oil Price Gains

International oil prices rose last week (12 October solstice October 16), with light crude futures up 0.69% and brent up 0.19% for the week, as Saudi Arabia and Russia continued to emphasize their commitment to cut output.

Light crude for November delivery fell 8 cents, or 0.20%, to close at $40.88 a barrel on the New York Mercantile Exchange on Oct. 16. Brent crude for December delivery in London fell 23 cents, or 0.53%, to settle at $42.93 a barrel.

Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin agreed in a phone call last week on the importance of all oil producers' continued cooperation and adherence to the Opec + agreement on production cuts, which would be in the interests of both producers and consumers, according to the Saudi state news agency. Opec + is expected to maintain current production cuts through 2021.

Oil prices were also supported by a larger-than-expected decline in U.S. crude inventories. Data released by the US Energy Information Administration on Friday showed that us commercial crude oil inventories fell by 3.8 million barrels from the previous week to 489 million barrels, a steeper decline than market expectations. Over the same period, motor gasoline stocks fell 1.6 million barrels month-on-month, distilled oil stocks fell 7.2 million barrels month-on-month, and propane and propylene stocks fell 1.9 million barrels month-on-month. U.S. commercial oil stocks, which include commercial crude, refined products, propane and propylene, plunged 16.8 million barrels from the previous week.

However, the severe rebound of the epidemic situation in Europe and the United States has brought pressure to oil prices. Last week, novel Coronavirus positive rate increased in various regions of the United States, which may well herald a rebound in the number of cases. In addition to the United States, the outbreak in Europe is also extremely fierce. As a result of the strong response to the second outbreak, European governments began to implement quarantine, restrictions and other anti-epidemic measures again in order to contain the further spread of the epidemic.

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