Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market, with Libya’s state oil company flagging progress on talks to resume exports.
FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019.
MELBOURNE: Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market, with Libya’s state oil company flagging progress on talks to resume exports.
U.S. West Texas Intermediate (WTI) crude futures fell as much as 44 cents, but recovered slightly after stronger-than-expected Chinese factory data. By 0201 GMT they were trading down 26 cents, or 0.7per cent, at US$39.44 a barrel, having jumped 3per cent on Monday.
Brent crude futures for September fell 17 cents, or 0.2per cent, to US$41.68 a barrel, paring Monday’s 92-cent gain. The less active August contract, which expires on Tuesday, fell 25 cents after gaining 69 cents on Monday.
Optimism on Monday had been based on strong growth in U.S. pending home sales, bolstering belief that global fuel demand is rising steadily as major economies reopen after coronavirus lockdowns.
But at the same time, coronavirus cases continue to rise in southern and southwestern U.S. states.
“It’s really difficult to say that demand is a one-way street. There are still plenty of risks going both ways,” said Vivek Dhar, mining and energy commodities analyst at Commonwealth Bank of Australia.
Bulls will be looking for more signs of a demand recovery in data due on Tuesday from the American Petroleum Institute industry group, and from the U.S. government on Wednesday.
A preliminary Reuters poll showed analysts expect U.S. crude oil stockpiles fell from record highs last week and gasoline inventories decreased for a third straight week.
On the supply side, investors are watching to see whether Libya, which can produce about 1per cent of global oil supply, is able to resume exports, blockaded since January amid a civil war.
Libya’s National Oil Corp (NOC) said on Monday it was making progress on talks with neighbouring countries to lift the blockade.
