Month in brief

• Date: 01 October 2020
• DOI: http://doi.org/10.1111/oet.12818
• Published date: 01 October 2020

THE MONTH IN BRIEF

Month in brief

September saw prices slide after a lengthy period of sta-

bility through the summer, as rising concerns over the

on-going impact of Covid-19 restrictions on demand

finally began to make themselves felt, driven by contin-

ued high numbers in the Americas and India, alongside

rising numbers from late August in Europe—which

together began to eat into the support provided by OPEC-

plus cuts.

Crude prices began to weaken from the first day of

the month, and Brent and WTI prices fell by almost $6/

bbl over the following week, bottoming out at $37.19/bbl

for November WTI on 8th September. In the first week,

bearish factors also included a stronger US dollar and

news from the US EIA of weaker US-refined product

demand, which was down more than 13% during the

week ended August 28th at 16.98 mn bpd—the sharpest

decline since early April. However, there was some lim-

ited support from a larger-than-expected draw in US

crude stocks—which fell 9.36 to 498.4 mn bbl in the same

week, according to the EIA. The draw marked a sixth

week of declining crude inventories, which left stockpiles

around 13% above the 5-year average.

Early in the second week prices continued to soften

as oil demand outlooks were revised downward, while

Covid-19-related falls in equity markets hit market senti-

ment generally. Saudi Aramco then cut OSPs for October,

with an eye on defending market share, sending both the

main benchmarks down to 2-month lows. After a slight

rebound on 9th September, prices slumped back and

Brent remained just below $40/bbl for the rest of the sec-

ond week, with WTI a couple of dollars lower. They

dipped further on Monday 14th, with November Brent

bottoming out at $39.61/bbl on news of further falls in

US gasoline demand.

Prices then rebounded, gaining almost $4/bbl over

the following 3 days, with support from reduced US Gulf

supply as the arrival of Hurricane Sally led to widespread

rig evacuations and shut-ins—temporarily taking up to

75% of the region's 2 mn bpd of production offline. The

supportive momentum was maintained later in the third

week on evidence of tight compliance to current quotas

among OPEC-plus members, and growing efforts to make

up for earlier overproduction by some, with Saudi leaders

warning speculators not to bet on lower prices—implying

a willingness to cut further if demand growth continued

to weaken.

The fourth week began with a price slide on bearish

news from Libya that an agreement had been reached to

resume crude exports, although markets only expected

half (6-700 000 bpd) the pre-blockade level to be reached

by year-end as the distribution of export revenues had yet

to be finalized and no oil has yet flowed. Concerns over

demand persisted, especially in parts of Europe as a sec-

ond wave of contagion took hold, while Asia and Africa

were less effected. Jet fuel markets remained particularly

weak, while gasoline was proving more resilient. At the

end of the month there were signs that anticipated US

government stimulus would be less than expected, and

prices dropped as the persistent demand concerns took

center stage, leaving Brent and WTI either side of $40/bbl

on 30th September.

How to cite this article: Month in brief. Oil and

Energy Trends. 2020;45:6. https://doi.org/10.1111/

oet.12818

DOI: 10.1111/oet.12818

6© 2020 John Wiley & Sons Ltd Oil and Energy Trends. 2020;45:6.wileyonlinelibrary.com/journal/oet