Oil drops for second day as worsening pandemic threatens demand drop

TOKYO, Oct 2 (Reuters) - Oil prices fell nearly 1% on
Friday, extending losses into a second day as rising production
of crude comes amid a worsening COVID-19 pandemic which
threatens to bring more restrictions on movement and consumption
that will likely hit demand for fuel.
Brent crude LCOc1 was down 36 cents, or 0.9%, at $40.57 a
barrel at 0055 GMT, after falling more than 3% on Thursday. U.S.
oil CLc1 was also 36 cents, or 0.9%, lower at $38.36, having
fallen nearly 4% in the previous session.
U.S. oil is heading for a drop of nearly 5% this week, while
Brent is on track to fall more than 3%, in a second consecutive
week of decline for both contracts.
"The fundamentals of oil are not encouraging ... as supply
rises and demand prospects look bleak," ANZ Research said in a
client note.
Rising crude supplies from the Organization of the Petroleum
Exporting Countries (OPEC) is weighing on the market as
September production rose by 160,000 barrels per day (bpd) from
a month earlier, a Reuters survey showed. The increase was mainly the result of more supplies from
Libya and Iran, OPEC members that are exempt from an agreement
to withhold production between OPEC and allies led by Russia - a
group known as OPEC+.
Libya's production has risen faster than analysts expected
with the relaxation of a blockade by the Libyan National Army,
which is trying to take control of the capital and is mainly
based in the eastern part of the country, where many oil
facilities are located.
Output of crude from Libya has risen to 270,000 bpd as the
country ramps up export activity, a Libyan oil source told
Reuters on Thursday. New COVID-19 cases worldwide have rise to more than 34
million, nearly 2 million more than at the end of last week,
based on Reuters tallies. This week marked the grim milestone of deaths exceeding 1
million and several countries are tightening restrictions and
contemplating lockdowns as infections accelerate, prompting
concerns about the impact on demand for fuel.