Oil prices slid on Tuesday as traders embraced profit-taking after sharp gains were recorded in the last session and an imminent rise in supply weighed on the market, with Libya’s state oil company drawing attention to progress on talks to resume exports.
Brent crude futures for September dropped 24 cents or 0.6% to $41.61 per barrel at 07:10 West Africa Time, weakening Monday’s 92 cent gain. The less-active August contract, expiring on Tuesday, was down by 24 cents to $41.47.
U.S. West Texas Intermediate (WTI) crude futures fell by 33 cents or 0.8% to $39.37 a barrel.
Bonny Light, Nigeria’s banner oil grade, slipped by 33 cents or 0.81% to $40.37 per barrel at the last session just as another key national grade, Qua Iboe, shed 92 cents or 2.23% to close at $40.29 a barrel.
“Both contracts (Brent and WTI) have retreated modestly today, driven by profit-taking flows after the robust New York session.
“Although the ranges overnight were impressive, it is essential to note that oil markets are range trading and not trending,” said Jeffrey Halley, Senior Market Analyst at OANDA.
Coronavirus infections continue to increase in southern and southwestern U.S. states, but considerable growth in U.S. pending home sales lifted the optimism that global fuel demand is improving.
“It’s really difficult to say that demand is a one-way street. There are still plenty of risks going both ways,” Vivek Dhar, Mining and Energy Commodities Analyst at Commonwealth Bank of Australia said.
Bulls will be looking out for more hints of a demand recovery in data due from the American Petroleum Institute industry group on Tuesday, and from the U.S. government on Wednesday.
On the supply side, investors are watching to see if Libya, which can produce around 1% of global oil supply, is able to resume exports, blockaded since January amid a civil war.
Libya’s National Oil Corp (NOC) on Monday said it was making progress on talks with neighbouring countries to lift the embargo.
In the same vein, weak Japanese industrial production data also impacted market sentiment, heightening the possibility of a bumpy recovery in fuel demand.
However, stronger-than-expected Chinese factory data, and a decline in Iraq’s June oil exports helped limit bigger losses.