UPDATE 9-Oil drops 3% as virus infections, Libyan oil output rebound

* COVID-19 cases surge in the U.S., Europe
* OPEC chief says rising infections may delay oil recovery
* Libya lifts force majeure on last oilfield after blockade
* U.S. offshore workers flee as storm heads toward Gulf of
Mexico

(Updates prices, market activity)
By Stephanie Kelly
NEW YORK, Oct 26 (Reuters) - Oil prices fell more than 3% on
Monday, extending last week's losses as coronavirus cases
continued to surge in the United States and Europe, while
Libya's rebound in crude production raised fears of oversupply.
The United States reported its highest number yet of new
coronavirus infections in two days through Saturday, while in
France new cases hit a record of more than 50,000 on Sunday.
Italy and Spain imposed fresh restrictions to curb the
virus. "It's a dark Monday in the oil market," said Bjornar
Tonhaugen, head of oil markets at Rystad Energy. "We have long
warned that a 'second wave' of strict coronavirus restriction
measures could be re-imposed, and it's now happening for real."
Brent LCOc1 dropped $1.31, or 3.1%, to settle at $40.46 a
barrel. U.S. West Texas Intermediate (WTI) fell $1.29, or 3.2%,
to settle at $38.56 a barrel. Both contracts fell almost 2.5%
last week.
Libya's National Oil Corp (NOC) on Monday ended force
majeure on the remaining facilities closed by an eight-month
blockade of oil exports by eastern forces. NOC said on Friday that Libyan production would reach 1
million barrels per day (bpd) in coming weeks, a quicker ramp-up
than many analysts had predicted. That could complicate efforts
by the Organization of the Petroleum Exporting Countries to
restrict supply to cope with lackluster demand. "The last thing the market needs right now is additional
supply," said Warren Patterson, ING's head of commodities
strategy.
OPEC's secretary general said an oil market recovery may
take longer than hoped as coronavirus inflections rise around
the world. OPEC+, the producer group and it allies including Russia, is
set to increase output by 2 million bpd in January 2021 after a
record production cut earlier this year.
"OPEC+ must not be careless and have to address the issue of
the extra barrels appearing in the market, otherwise the days of
relatively stable oil prices will be numbered," said oil broker
PVM's Tamas Varga.
Meanwhile, the U.S. Gulf Coast energy sector prepared for
another storm. Oil producers on Monday were halting offshore
production in the Gulf of Mexico as the 27th named storm of the
season strengthened and looked likely to threaten the United
States as a hurricane. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
CHART: U.S. oil may retest support at $38.57 Brent oil may test support at $40.95 Libya oil exports https://tmsnrt.rs/2TaHWFq
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