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By: Stuart Cowell
Ten trading days ago (October 10) USOil posted its October high at $41.85. Earlier today the price printed five-month lows of $33.65 after the Friday close at $35.77. The high to low 10-day move replicated the early September $43.50 – $36.30 fall, both precipitated by Covid concerns and weak global demand, only today we also have November 3 but a day away.
The contract has since rallied back to $35.85 highs in early New York trade. Record global Covid cases, accompanied by lockdowns in Germany, France and the UK have weighed on demand and prices, with more of the same likely in the near-term. Rising inventory levels in the US, and upped Libyan production, along with prospects of OPEC+ reversing its self-imposed production cuts at the end of the year, will keep oil prices capped for now.
Also earlier today, Tropical Storm Eta was upgraded to a Hurricane and is due to make landfall in Nicaragua and Honduras tomorrow. No impacts to the Mexican Gulf oil production is expected at this time. However, with the confirmation of Eta, it makes 2020 (with still two months to go) the joint highest season (along with 2005) as the most active Atlantic hurricane season on record. 2005 had 27 named Hurricanes. Hurricanes are still possible in November and December but tend to be less impactful as temperatures begin to fall.
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