Oil prices rise as new lockdowns unlikely to dent limited demand

London — Oil prices rose on Tuesday as analysts took the view that renewed lockdown restrictions would have only a limited impact on fuel demand, partly reversing a steep drop in prices the previous day.

Brent crude rose 56c, or 1.4%, to $42.00 a barrel at 9.37am GMT.

US West Texas Intermediate (WTI) crude for October, due to expire on Tuesday, rose 32c, or 0.8%, to $39.63 a barrel. The more active November contract was up 56c, or 1.4%, to $40.10.

Markets were nervous about fuel demand in countries such as Britain, where the government is to tell people to work from home again and impose new curbs on pubs, bars and restaurants.

“As any new restrictions will likely be more localised, the oil demand recovery should still continue, although at a slower pace with the easiest demand gains behind us,” UBS oil analyst Giovanni Staunovo said.

The easing of the oil blockade in Libya also pressured prices on Monday, but analysts expected the market to remain undersupplied as Libyan exports were unlikely to quickly reach the levels seen before the conflict.

“The path towards a new normal in the oil market has become bumpier, but we still see demand topping supplies on the margin and the surplus slowly disappearing,” said Norbert Rücker, analyst at Swiss bank Julius Bär.

Traders are awaiting the American Petroleum Institute’s data on US oil inventories due later on Tuesday.

US crude oil and petrol stockpiles likely fell last week, while inventories of distillates, including diesel, were seen climbing, a preliminary Reuters poll showed.

Reuters