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Rising coronavirus cases suppress demand

by Bunkerist
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Oil prices fell on Tuesday, due to the worries about a new wave of COVID-19 infections worldwide.

Brent crude futures fell 37 cents, or 0.8% to $43.78 a barrel , while West Texas Intermediate (WTI) crude futures fell 30 cents, or 0.7% to $40.71 a barrel at 0414 GMT.

Looking at demand data, global production has been highly encouraged, but there are signs that the recovery of oil demand has stopped in several markets with the revival of COVID-19.

Norway has halted passenger ship traffic with the latest European travel alert, while the lockdowns were tightened against new infections from Manila to Melbourne.

Another indication that the demands are picking up irregularly is the rise in US refined product stocks last week.

According to analysts, US gasoline stocks are estimated to increase 600,000 barrels on average. Distilled inventories containing diesel and heating oil probably increased by 800,000 barrels, while crude oil inventories fell 3.3 million barrels a week to 31 July.

At the same time, the Organization of Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC +, are increasing production by about 1.5 million barrels a day this month. US producers also plan to restart shut-in production, and inventories are close to historic peaks.

It is fair to say that most of the oil market participants expect a downward pressure on oil as COVID-19 damages the overall landscape and OPEC + starts the week by increasing production.

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