Rising production from Libya will also be a concern for OPEC+, according to Reuters. Credit: D Thory from Pixabay.

Oil prices have ‘extended their rally’ on the US Election Day due to a recovery in financial markets on 3 November.

However, concerns over surging cases of global Covid-19 infections restricted further gains.

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Brent crude futures rose $0.70 to $39.67 a barrel, while US West Texas Intermediate (WTI) futures increased by $0.78 to $37.59, Reuters reported.

On 2 November, both Brent and the WTI benchmarks gained nearly 3%.

Oil brokerage PVM’s Tamas Varga said: “The jump has borne all the hallmarks of a massive, logical and even inevitable short-covering prior to the US presidential elections.

“It would be tempting to conclude that the recovery from last week’s slump is now underway, but it is simply not a plausible scenario.”

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Italy is the latest European nation to tighten coronavirus-related restrictions.

The measures implemented in the country include limiting travel between the ‘worst-hit regions’, as well as a nightly curfew.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC), and allies including Russia, together known as OPEC+, is cutting production by about 7.7Mbpd to support prices.

The group intends to ramp up output by 2Mbpd from January next year.

Commerzbank stated: “The hope is now that a continued cut at current levels will be the necessary bridge over the second Covid-19 wave until vaccines are rolled out during [the first half of 2021],” Commerzbank.”

Furthermore, rising Libyan production, which is on course to hit 1Mbpd in the near term, from just 100,000bpd in early September, will also be one of the concerns for OPEC+.

A policy meeting is expected to be scheduled by the OPEC+ over 30 November and 1 December.