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Oil prices slip on demand worries, prospect of Libyan supply return

The Address | Benghazi – Libya

NEW YORK – 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 51 cents, or 1.28%, to trade at $39.19 per barrel, having jumped 3% on Monday.

Brent crude futures for September fell 17 cents, or 0.2%, to $41.68 a barrel, paring Monday’s 92-cent gain. The less active August contract, which expires on Tuesday, fell 52 cents, or 1.25%, to trade at $41.17 per barrel, 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 1% of global oil supply, is able to resume exports, blockaded since January .

Libya’s National Oil Corp (NOC) said on Monday it was making progress on talks with neighboring countries to lift the blockade.

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