Oil prices slipped last week on demand concern stoked by a surge in the COVID infections in Europe and firm dollar but turned lackluster in the latter half of the last week.  Global energy demand concerns are negative for crude prices on concern European governments may need to re-impose lockdown measures in an attempt to slow the spread of the COVID pandemic.

The IEA said on Thursday that it is more likely to downgrade its oil demand forecasts than upgrade them. Agency also said that risks to demand are a cause for concern for 2021 and that crude stockpile draws are still not steep enough.  Earlier this month, The International Energy Agency (IEA) cut its global 2020 crude oil demand forecast by -200,000 bpd to 91.7 million bpd and said the market outlook has grown "even more fragile" with a resurgence of the COVID pandemic.

Another bearish factor for crude prices is the resumption of Libyan crude exports after the state-run National Oil Corp said on Wednesday that it reopened another port, the third in less than a week, which will allow more of Libya's crude exports to resume. The three reopened ports had been shut since January due to the Libyan civil war.

Wednesday’s weekly EIA data showed that U.S. crude oil inventories as of Sep 18 were +13.3% above the seasonal 5-year average. Friday's data from Baker Hughes showed that active U.S. oil rigs rose by 4 rigs in the week ended Sep 25 to 183 rigs, moderately above the 15-year low of 172 rigs posted in the week ended Aug 14.

OPEC, in its September monthly report, revised down its outlook for global oil demand to an average of 90.2 million barrels per day in 2020, that’s down 400,000 bpd from the previous month’s estimate and reflects a contraction of 9.5 million bpd year-on-year.

Natural Gas October prices on Friday retreated as they fell back from Thursday's 1-week high. A mixed weather outlook prompted long liquidation. The Commodity Weather Group sees colder-than-normal temperatures for the eastern half of the U.S. during Sep 30-Oct 4, although the European weather model sees a weaker cold front in the eastern U.S. than initially projected. Earlier NG prices tumbled to 1¾-month low on last Monday on demand concern.

U.S. Natural Gas production continues to be on the weaker side, which is supportive of prices. U.S. lower-48 state dry gas production on Friday was down -9.8% y/y at 84.511 bcf/d, according to Bloomberg data.  Thursday's Weekly EIA Report showed that Natural gas inventories rose +66 bcf last week to 3,680 bcf, up +14.8% y/y, and are +12.4% above the 5-year average. Baker Hughes, on Friday, reported that the number of active U.S. Natural Gas drilling rigs in the week ended Sep 25 rose by +2 rigs to 75 rigs, modestly above the record low of 68 rigs posted in the week ended July 24 (data since 1987).