Oil prices lifted on Tuesday, scaling down steep overnight depreciation, as the latest tropical storm in the Gulf of Mexico lost intensity, even though concerns over demand for fuel continued with surges in global COVID-19 infections.
Brent crude futures was up by 47 cents or 1.13% at $41.91 a barrel at 11:39 West Africa Time.
U.S. West Texas Intermediate crude futures for October, set to expire on Tuesday, edged up by 63 cents or 1.60% to $39.94 a barrel. The more active November contract jumped by 13 cents or 0.3% to $39.67.
Bonny Light, Nigeria’s banner oil grade, eased by $2.06 or 4.84% to $40.54 per barrel at Monday’s session.
Oil prices set off for recovery as refineries in Texas pressed ahead with their operation, ignoring heavy flooding predictions, with Tropical Storm Beta hoped to continue waning, assuaging fears about U.S. refinery demand for feedstock.
The two oil benchmarks reported approximately 4% loss on Monday, bashed hobbled by evolving worries that an uptick in coronavirus cases in major markets could set new lockdowns in motion and weakened demand.
It strengthened the probability of a Libyan oil comeback when it is not needed.
“We had a pretty punchy risk-off session (overnight) … on fears around the risk that a COVID resurgence starts to have negative impacts on demand again,” Lachlan Shaw, commodity research head at National Australia Bank said.
Markets are on the tenterhooks regarding demand in countries like the United Kingdom, where new curbs are already in place. Health authorities in the United States have warned of a resurgence in the winter ahead.
“When the virus resurges, governments lockdown, impose restrictions, and individuals and businesses start to retreat. It’s all bad for demand,” Shaw said.
Traders will have their eyes set on the American Petroleum Institute’s statistics on U.S. oil stocks to be issued on Tuesday.
It is possible that U.S. crude and gasoline inventories dropped last week, while distillate storages, including diesel, were seen climbing, a preliminary Reuters poll revealed.
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