Oil future changes as the U.S storm eases but demand retrieval fears continue

FILE PHOTO: Paul Putnam, 53, a rancher and independent contract pumper walks past a pump jack in Loving County, Texas, U.S. November 25, 2019. REUTERS/Angus Mordant

By Mordi Chukwunonso Esther

Oil futures were a little steady on Tuesday after sharp overnight losses as the latest tropical storm in the Gulf of Mexico lost force but distress about fuel demand continued with outbreaks around the globe in coronavirus cases.

Brent crude futures edged three cents 0.1 per cent, lower to $41.41 a barrel at 06:37 GMT thus, reversing earlier small gains while U.S West Texas Intermediate (WTI) crude futures for October, due to expire on Tuesday reduced to $39.51a barrel from four cents or 0.1 per cent. The more active November contract shed three cents or 0.1 per cent to $39.51.

Crude prices which fell about four per cent on Monday, won some break as Texas refineries stayed after a tropical storm was expected to keep losing strength, allaying worries about U. S refinery demand for feedstock. However concerns about global demand held away.

Vandana Hari, an energy analyst at Singapore-based Vanda insights said ‘’the recovery in sentiment after the rout in risk assets seen a fortnight ago was clearly fragile.

‘’’this week, the market is recalibrating to a likely stalling of the economic recovery in Europe as several countries in the region impose fresh restrictions to contain a surge in the coronavirus’’.

Monday’s price slump was motivated by fears that an increase in coronavirus cases in major markets could lead to fresh lockdowns and hurt demand. This raised the possibility that a return of Libyan oil could come when it is not needed as the country looks to tilt up exports.

‘’we had a pretty punchy risk off session (overnight) on the fears around the COVID-19 resurgence starts to have negative impacts on demand again’’ said Lachlan Shaw, National Australia Bank’s head of commodity research.

Markets are jittery about demand in places like the United Kingdom, where new limitations are being forced. US health officials are also warning of a new wave in the coming winter ‘’when the virus resurges, governments lockdown, impose restrictions and individuals and businesses start to retreat. It is all bad for demand,’’ Shaw said.

Traders will be looking out for the American Petroleum Institute’s data on U.S oil Inventories due later on Tuesday. U.S crude oil and gasoline stockpiles likely fell last week while inventories of distillates including diesel were seen climbing, a preliminary Reuters poll showed.

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