Oil Down Despite U.S. Stimulus Optimism
Oil was down on Tuesday morning in Asia. Prices rose in late trading
during the previous session as the U.S. Congress appeared closer to
agreeing a stimulus package, however, slack global demand reined them
back on Tuesday.
Brent oil futures fell 0.44% to $42.68 by 11:52 AM ET (3:52 AM GMT) and WTI futures were down 0.54% to $40.38.
Oil
prices rose in late trading overnight, with investors encouraged by the
latest U.S. political developments. House Speaker Nancy Pelosi
announced a new Democrat $2.2 trillion coronavirus relief package that
perked up the market. However, this may still not pass the
Republican-dominated Senate, with the two sides still far apart on their
goals.
"If it happens, the U.S. stimulus checks will go a long
way to shoring up U.S. oil demand at a most critical juncture and could
move oil prices back into a pre-September frame of mind," AxiCorp market
strategist Stephen Innes told Reuters.
Global oversupply fears
pulled prices back down again when Asian trade opened. Libya’s crude
production has soared this week, from 100,000 barrels per day (bpd) to
250,000 bpd. Libyan oil production had been under a blockade for several
months, lowering global supply and boosting prices. Iranian
sanction-busting oil exports have also risen, with 1.5 million bpd now
departing the country.
Demand worries were also highlighted by
Japan’s oil import data for August, with the island nation’s crude
imports falling by 26% according to government data.
The ongoing
rise in COVID-19 cases is further cause for investor gloom, with global
deaths now passing 1 million and global cases above 33 million. The
virus is also resurging in areas previously thought contained.
Fighting
between Azerbaijan and Armenia in the major oil and gas pipeline
corridor of the Nagorno-Karabakh region is also of concern for oil
investors.
Investors are now looking to crude oil supply data from the American Petroleum Institute (API), due later in the day.
Source : investing.com