Oil slips slightly on rising coronavirus cases

2 July, 2020 12:00 AM printer

NEW YORK: Oil prices slipped on Tuesday as investors worried that rising Covid-19 cases would hurt demand while supply could rise with a potential resurgence of Libyan oil production, which has slowed to a trickle since the start of the year.

The more-active September contract for Brent settled down 58 cents at US$41.27 a barrel. The August contract, which expires on Tuesday, fell 56 cents, or 1.2 per cent, to US$41.15. The contract has gained 16.5 per cent this month so far, and 81 per cent on the quarter, report agencies.

US crude was down 43 cents, or 1 per cent, at US$39.27 a barrel. US crude has risen 12.4 per cent in the past month, up about 95 per cent in the quarter, reflecting its recovery from late March. The contract pared losses in post-settlement trade after data from trade group the API showed a larger-than-expected draw in US crude stockpiles.

Fuel demand has recovered from the worst weeks of the outbreak, but cases have been rising in southern and southwestern US states. Northeastern states like New York and New Jersey doubled the number of states from which travelers face quarantine restrictions.

“Sustaining the independent show of gasoline strength will be challenged by coronavirus headlines where news has seen a definite negative shift in recent weeks,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.

Investors will seek signs of demand recovery in weekly inventory data due on Tuesday from the American Petroleum Institute industry group and from the US government on Wednesday.

Libya is trying to resume exports, which have been almost entirely blocked since January due to civil war. The state’s oil company hopes talks will end a blockade by eastern-based forces.