Oil prices rose on Tuesday as Tropical Storm Zeta headed towards the Gulf of Mexico threatening oil production in the area.
International benchmark Brent crude was trading at $41.23 per barrel at 0646 GMT for a 1.03% increase after closing Monday at $40.81 a barrel.
American benchmark West Texas Intermediate (WTI) was at $38.95 a barrel at the same time for a 1.01% increase after ending the previous session at $38.56 per barrel.
Oil prices increased as Tropical Storm Zeta made its way towards the Gulf of Mexico – an area that contains more than half of the country’s petroleum refining capacity.
The US National Hurricane Center said Zeta is expected to become a hurricane before it makes landfall in the Gulf on early Wednesday morning.
According to the US Bureau of Safety and Environmental Enforcement (BSEE), 15.87% of the current oil production and 6% of the natural gas production in the Gulf of Mexico has been shut-in.
-Rising supply vs. weak demand
Supply glut concerns, however, capped more price spikes as Libya's oil production is set to grow more after the lifting of a force majeure in the country's oil facilities and ports.
Excluded from the current output cut deal of OPEC+, Libya is now producing around 500,000 barrels per day (b/d) and expects total oil production to reach 800,000 b/d within two weeks and 1 million barrels per day (mb/d) within four weeks.
Oil prices are still under pressure due to weak global oil demand concerns caused by the COVID-19 outbreak.
European countries including Italy, Spain, France and Ireland started announcing new restrictions to curtail the spread of the pandemic.
According to data on Tuesday from Johns Hopkins University, the US, the world's largest oil-consuming country, still tops the number of cases above 8.7 million while India's cases now total over 7.9 million, and Brazil follows with over 5.4 million cases.
By Sibel Morrow