By Adam Claringbull
Investing.com – Oil was flat Tuesday morning in Asia after gains in overnight trading. U.S. President Trump’s return to the White House from hospital sparked a hike in oil prices during the previous session.
Brent oil futures rose 0.51% to $41.50 by 12:09 AM ET (4:09 AM GMT) and WTI futures were up 0.36% to $39.36.
Oil was positive overnight, rising on news that U.S. President Donald Trump had left hospital and returned to the White House after being treated for a COVID-19 infection. However, the buoyancy did not continue into this morning’s Asian trading, with continued oversupply and faltering demand worries flattening investor interest in the resource. On the price-positive side, growing industrial action by Norwegian oil workers reduced the country’s output by 330,000 barrels per day (bpd), while continued fighting in the Nagorno-Karabakh region threatens oil and gas pipelines.
Yet another storm brewing in the Gulf of Mexico led to the evacuation of oil platforms in the area, with tropical storm Delta heading toward Louisiana and Florida.
“It’s the supply-side factors that have changed in the last 24 hours and are contributing more to the uplift,” Lachlan Shaw, head of commodity research at National Australia Bank (OTC:NABZY) told Reuters.
However, oversupply from Iran and Iraq, and the growing resumption of Libyan exports, now up to 300,000 bpd, are producing drag in the market. Hedge funds and portfolio managers have also reduced their positions in oil over the last six weeks, with the sell-off in WTI futures reaching approximately 24 million barrels.
In the U.S., hopes are rising for the agreement of a new COVID-19 fiscal relief package, with House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin expected to continue the previous day’s talks later today.
China’s pledge to be carbon-neutral by 2060 is also expected to strongly reduce future demand, creating further downward pressure on prices. The Asian giant has been a main driver of global energy markets for nearly a decade.
The global death toll from the COVID-19 pandemic continues rising, having passed 1 million earlier in the previous week, with case numbers now above 35 million, pushing back global economic recovery.
Investors are now looking to crude oil supply data from the American Petroleum Institute (API), due later in the day.