Crude oil prices were down on Tuesday with weak global demand sustained by soaring cases of the novel coronavirus (COVID-19) outbreak in Europe and the US and the recent swift oil supply return from Libya following an eight-month blockade.
International benchmark Brent crude was trading at $38.80 per barrel at 0627 GMT for a 0.44% decrease after closing Friday at $38.97 a barrel.
American benchmark West Texas Intermediate (WTI) was at $36.69 a barrel at the same time for a 0.33% fall after ending the previous session at $36.81 per barrel.
The COVID-19 outbreak is still putting downward pressure on oil prices and hitting five-month lows as European countries announce lockdowns and restrictions to fight the second wave of the pandemic.
France and the UK announced nationwide lockdowns and other European countries, including Austria, Germany, Italy and Spain brought further strict restrictions to curtail the spread of the outbreak.
According to data from Johns Hopkins University on Tuesday, the US, the world's largest oil-consuming country, still tops the number of cases above 9.2 million, while cases in India now total over 8.2 million, and Brazil follows with over 5.5 million cases.
Supply glut concerns capped more price declines, as Libyan oil production is set to intensify further after the lifting of a force majeure in the oil facilities and ports in the country.
Excluded from the current output cut deal of OPEC+, Libya expects total oil production of 1 million barrels per day (b/d) by next month.
Oil markets are focused on the outcome of the US presidential election, the run-up of which is escalating uncertainty and driving prices down.
Further price declines, however, were limited with optimism over an OPEC+ oil production cut agreement.
The OPEC+ group, which has curbed output since January 2017 to support prices, is now reducing production by 7.7 million b/d, down from cuts totaling 9.7 million b/d imposed from May 1 to Aug. 1. The group is due to pare that further by 2 million b/d starting from next year.
Political risk and oil analyst Jose Chalhoub said oil prices are expected to remain at the current low levels at least until the end of 2020 due to an increase in coronavirus cases. The lukewarm prospect of demand recovery at a time when more oil is coming from Libya, and with possible additional barrels from Iran if Democrat candidate Joe Biden wins the US presidential election also supports this low price forecast.
"After having hovered in the range between $40 and $42 per barrel for a while, we are now watching how oil prices once again are suffering their second slump mainly as a consequence of the second wave of COVID-19 in Europe and the spike of numbers of cases in the US impacting the oil demand," he said.
Chalhoub also stressed that investors are focusing on the next moves that OPEC and Russia may take at OPEC’s ordinary meeting at the end of November.
The OPEC+ group will meet between Nov. 30 and Dec. 1 to agree on a policy for 2021 onwards.
By Firdevs Yuksel and Sibel Morrow