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.