Oil - resurgence of supply, weakening demand and elections

• Libya informs about full readiness to resume production, it is possible that production will return to 1 million barrels per day in the coming weeks
• Daily COVID-19 cases in the US exceed 70,000, possible mobility restriction, gasoline stocks ahead of seasonal increase
• China imports a lot from the US, but that could change in the context of the US elections
• Recent polls indicate a strengthening of Biden's position, a possible return of a large amount of supply globally, and support for ecological vehicles

Libya

The signing of the ceasefire in Libya means that the country is ready to resume full production. Until recently, production was less than 100,000 barrels per day, recently it increased to about 500,000 barrels per day. However, in the coming weeks, production of over 1 million barrels per day is expected to return. Theoretically, we cannot talk about Libya's accession to the production cut agreement with OPEC + until the country's production exceeds 1.2 million barrels per day, i.e. the reference level.

Coronavirus

The pandemic is starting to spin out of control. This means the possibility of introducing "hard" restrictions in many countries. Already at this point, in many European countries, mobility has fallen below the baseline level at the beginning of this year. In the United States, the number of cases exceeds 70,000 per day and hospitals start to fill up, which can lead to local restrictions on movement. This may lead to a reduction in fuel demand.

China

China imported about 1 million barrels per day in September from the US - that's a lot, but at the same time the country has theoretically best dealt with the coronavirus pandemic and life there looks relatively normal. However, it is possible that this situation will change after the elections. It is worth remembering, however, that higher imports from the USA mean no imports from other countries, e.g. from Iraq or Angola. These countries limit their production and exports, but theoretically, from January, we should expect the return of approx. 2 million barrels per day from the OPEC + group.

Elections

Biden's win is a very negative scenario for crude oil. Of course, this may limit production in the US, but it is unlikely to lead to a collapse. At this point, shale production is and will remain subdued anyway. However, Biden's win means a possible return of 1-2 million barrels a day in the event of a return to the nuclear deal with Iran. In addition, Biden's win also means reduced demand for oil due to the support of the renewable energy idea. This could mean a greater demand for electric cars.

Refining margins in Europe are dropping below 0. Does this mean a total shift towards electric cars? Source: Bloomberg, Total

Crude oil has fallen sharply last week. For the time being, support is maintained in the form of the 61.8 retracement of the last upward impulse, although it is worth noting that a supply signal is being created from the crossover of the 100 SMA with the 50 SMA. Strong support is located at the 200 SMA (retracement 78.6). A Biden win could lead to a test of the key support around $ 36.5 per barrel. Source: xStation5