A pump jack operates near Stratford, Texas on September 26 2020. Picture: BLOOMBERG/ANGUS MORDANT
A pump jack operates near Stratford, Texas on September 26 2020. Picture: BLOOMBERG/ANGUS MORDANT

Melbourne/Singapore — Oil prices fell on Tuesday, paring gains from the previous session, as persistent demand concerns due to the coronavirus pandemic outweighed hopes for a new US stimulus package.

More than 1-million people had died of Covid-19 by Tuesday, a Reuters tally showed, with fatalities and infections surging in several countries.

US West Texas Intermediate (WTI) crude futures dropped 22c, or 0.5%, to $40.38 at 0438 GMT.

The more-active Brent crude futures for December fell 19c, or 0.4%, to $42.68 a barrel. The November contract, which expires on Wednesday, fell 17c to $42.26 a barrel.

Commodities markets crept up earlier in the day as Democratic legislators unveiled a new $2.2-trillion coronavirus relief bill, which US House of Representatives speaker Nancy Pelosi said was a compromise measure.

“If it happens, the US stimulus cheques will go a long way to shoring up US 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 said in a note.

Brent and WTI in August hit their highest levels since early March on optimism over rising fuel demand and oil producers’ strong compliance with promised supply cuts. Since then, though, they have dropped about $3 on demand worries.

“The rally (overnight) has quickly run out of steam in Asia,” said Jeffrey Halley, senior market analyst at Oanda.

“The price action suggests that though the speculative community is still short ... the underlying bearish drivers are still ascendant,” he said, pointing to reduced consumption and a global oversupply.

Investors will be looking for signs of US demand growth in data from the American Petroleum Institute on Tuesday and the Energy Information Administration on Wednesday.

Five analysts polled by Reuters on average estimate US crude oil inventories rose by 1.4-million barrels in the week to September 25. They expect fuel stockpiles fell by 1.6-million barrels and distillate inventories, which include diesel and jet fuel, fell by 800,000 barrels.

Traders were also keeping an eye on clashes between Armenia and Azerbaijan over the Nagorno-Karabakh region. If the conflict escalates it could affect oil and gas exports from Azerbaijan, analysts said.

Meanwhile, data from Japan’s ministry of finance showed that the country’s imports of crude oil in August fell more than 25% from a year earlier.

Reuters

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