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Daily output has reached 800,000 barrels per day and the country is targeting 1.3 million by the beginning of 2021, said Mustafa Sanalla, the chairman of Libya’s state-run National Oil Corp. That compares with just 100,000 barrels a day in early September.
Libyan oil production has ramped up faster than expected and hit the market “at the worst possible time,” said Ian Nieboer, Calgary-based managing director at oil analytics firm Enverus.
The combination of surging oil production and weakening demand represents “the sum of all fears” for the oil market, Niebor said.
The final quarter of 2020 was when most analysts had expected to see “substantial stock draws” from oil in storage but lower-than-expected withdrawals mean the oil price improvement that was expected in the fourth quarter is being pushed back to next year.
“We’ve seen the whole curve move down,” Nieboer said.
We’ve seen the whole curve move down
As the outlook for oil deteriorates, many analysts see the outlook for natural gas improving, in particular ahead of the U.S. presidential election where former vice-president Joe Biden is leading in the polls and has pledged to ban hydraulic fracturing on federal lands.
For the first time in years, the outlook for natural gas prices in North America has improved dramatically, largely as a result of oil production declining in places like Texas, taking associated gas off the market. The Henry Hub natural gas benchmark price in Louisiana averaged US$3.29 per mcf on Nov. 1, while Alberta’s AECO price averaged US$2.51 per mcf.