Oil prices continued to slide on Tuesday as concerns grow about the resurgence of coronavirus cases around the world which could stymie a recovery in oil demand just when Guyana is preparing to export its 4th 1-million-barrel of Liza Crude, set for November.
According to Reuters, brent crude futures were trading down 34 cents, or 0.8%, at $42.28 a barrel by 0903 GMT on Tuesday. U.S. West Texas Intermediate (WTI) crude futures fell 15 cents, or 0.4%, to $40.68.
Coronavirus cases topped 40 million on Monday, according to a Reuters tally, with a growing second wave in Europe and North America sparking various degrees of lockdown measures.
A meeting on Monday of a ministerial panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, pledged to support the oil market as concerns grow over soaring coronavirus cases.
Guyana’s Minister of Natural Resources, Vickram Bharrat, told OilNOW in August the country will lift its 4th million-barrel oil cargo in mid-November. So far, Guyana has received around US$150 million in oil sales and royalty from production at the Liza Phase 1 development, with the November lift pending.
“We just have one FPSO out there and…at the end of this year we’ll have close to 200 million US dollars from that one FPSO,” Mr. Bharrat said.
But the revenue Guyana receives from the 4th lift will be highly dependent on how big of an impact the second virus wave has on oil demand.
Reuters said for now, OPEC+ is sticking with a deal to curb output by 7.7 million barrels per day (bpd) to the end of the year and then increasing production by 2 million bpd in January.
“Monday’s JMMC meeting failed to match market hopes of scrapping the planned output rise in January amidst an increasingly precarious demand environment,” JBC Energy was quoted as saying by Reuters.
OPEC watchers, including analysts from U.S. bank J.P. Morgan, have said that a weak demand outlook could prompt OPEC+ to delay the reduction in curbs.
“Demand recovery is uneven … Today this process has slowed down because of a second coronavirus wave but has not yet fully reversed,” Russian Energy Minister Alexander Novak told the JMMC meeting.
Meanwhile, OPEC member Libya, which is exempt from the cuts, is ramping up production after armed conflict shut almost all of the country’s output in January.
Output from its biggest field, Sharara, resumed on Oct. 11 and is now at about 150,000 bpd, about half its capacity, two industry sources told Reuters.
Another 70,000-bpd oilfield is expected to restart on Oct. 24.