Monday kicked off another tough week for oil with prices dipping below $40 per barrel following the destruction caused by Hurricane Delta in the Gulf of Mexico. Workers are now heading back to refineries to resume production.
To make matters worse for the U.S. oil and gas industry, Libya announced plans to finally reopen its largest oil field, which will undoubtedly flood the global oil supply when there is very little demand, further driving down prices.
According to people familiar with the matter, the Libyan National Oil Corp. received the green light to resume operations with plans to produce nearly 300,000 barrels in 10 days.
“Libyan production picking up pretty quickly here is adding barrels that nobody needs,” said Bob Yawger, head of the futures division at Mizuho Securities.
Oil companies are struggling since the COVID-19 pandemic began
Hurricane Delta reportedly shut down 92% of U.S. oil production, forcing workers to return to their duties on Saturday. New York oil futures fell 3.8% by Monday, bringing oil prices down to $39 per barrel. Since the onset of the COVID-19 pandemic, oil companies have been struggling to generate profits.The situation led to massive layoffs in oil-producing states.