Brent crude oil, the international standard, fell 68 cents to $37.26 per barrel and West Texas Intermediate crude oil, the U.S. benchmark, was off 84 cents at $34.95.
“You can sum up the selloff in oil in two words: lockdowns and Libya,” said Phil Flynn, senior market analyst at the Price Futures Group. “Libyan oil production is on target to hit over 1 million barrels a day at a time when lockdowns in Europe will zap demand.”
The U.K., France and Germany were among the countries that imposed stay-at-home orders over the weekend as new COVID-19 case counts remained near all-time highs. The new measures are expected to last for at least a month.
Global lockdowns announced earlier this year reduced oil demand by about 30 million barrels per day (bpd), driving WTI crude below zero for the first time. Declining demand is expected at a time when the market is likely to get hit with a new wave of supply as Libyan production gets back up to normal.
Libyan oil production has returned 800,000 bpd, up more than 100,000 barrels from just a few days ago, Reuters reported on Saturday, citing a source. Output is expected to top 1 million bpd within the next month.
Oil exports from the country were subject to an eight-month blockade by eastern forces that was lifted last week. The blockade resulted in production declining to about 100,000 bpd from 1.2 million bpd, according to Reuters.