By Adedapo Adesanya
Oil prices were down on Tuesday, erasing the previous day’s gains as rising coronavirus cases dampened the outlook for demand and weakened optimism over more US stimulus.
Brent crude futures went down 19 cents or 0.44 per cent at $43.22 per barrel while the US West Texas Intermediate (WTI) crude futures fell 56 cents or 1.35 per cent to $41.04 per barrel.
Prices had found support from efforts to stimulate the US economy’s recovery from the coronavirus crisis, which also raised hopes for stronger oil demand.
However, the possibility that the proposal from Senate Republicans will likely face opposition from Democrats and delay the passage of a final stimulus package was closely observed by investors.
Also affecting prices was data showing that US consumer confidence dropped in July due to a flare-up in COVID-19 infections across the country, which is threatening the country’s economic recovery.
The Conference Board said on Tuesday its consumer confidence index dropped to a reading of 92.6 this month from 98.3 in June.
Also, the country’s Federal Reserve’s policy-setting panel meets on Tuesday and Wednesday, where it is expected to reiterate it will keep interest rates near zero for years to come.
Analysts believe that the market may hold steady for a short period based on this but noted that for oil prices to break out higher, there must be a significant flattening of the COVID-19 cases. However cases continue to rise to above 16.6 million on Tuesday.
Industry data on the US stockpiles is due later after this report but expectations are that crude oil stockpiles were likely unchanged last week, while inventories of refined products probably declined.
The market has started moving away from the ease of record cuts by the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ which will now see a tapering to 7.7 million barrels per day till December compared to 9.7 million that has been reduced from May through July.
Modupe Gbadeyanka