Oil prices regained a semblance of stability on Tuesday after suffering sharp losses over the previous session and last week, as a resurgence of coronavirus cases globally hit prospects for crude demand while increasing supply also hurt sentiment.
The gloomy backdrop is set to keep prices under pressure over the coming day.
U.S. oil was up 31 cents, or 0.8%, at $38.89 a barrel, after declining more than 3% on Monday.
The lack of progress in striking an agreement for a U.S. coronavirus relief package added to the general market gloom, although U.S. House of Representatives Speaker Nancy Pelosi said on Monday she was hopeful a deal with the White House can be reached before the Nov. 3 elections.
A wave of coronavirus infections sweeping across the United States, Russia, France, and many other countries has undermined the global economic outlook, with record numbers of new cases possibly forcing some countries to impose fresh restrictions as winter looms.
“The market is under pressure from a toxic brew of no stimulus, rapidly increasing coronavirus cases, and the surprise increase of oil production in Libya,” Bob Yawger, director of energy futures at Mizuho Securities.
Prices got some support from the potential drop in U.S. production as oil companies began shutting offshore rigs with the approach of a hurricane in the Gulf of Mexico.
The worst is over for the crude market, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman also said on Monday.
But that contradicted an earlier remark from OPEC’s secretary general, who said any oil market recovery may take longer than hoped as coronavirus infections rise around the world.
Libyan production is expected to reach 1 million barrels per day (bpd) in the coming weeks, the country’s national oil company said on Friday, a quicker return than many analysts had predicted.
That is likely to complicate efforts by the Organization of the Petroleum Exporting Countries to restrict output to deal with weak demand.
OPEC+, the producer group and allies including Russia, is planning to increase production by 2 million bpd from the beginning of 2021 after record output cuts earlier this year.
(Reporting by Aaron Sheldrick Editing by Shri Navaratnam) 29dk2902l