Oil prices slid on Tuesday amid concerns that a nascent recovery in fuel demand could stall as a fresh wave of COVID-19 infections around the world sparks tighter lockdowns just as major producers ramp up output.
Brent crude settled at $44.15 a barrel, rising 63 cents, or 1.5%.
Both global benchmark Brent and US West Texas Intermediate (WTI) were down around one percent, with Brent trading at $43.19 a barrel and WTI at $39.85 a barrel as of 10am GMT.
US manufacturing activity accelerated to its highest level in almost 1-1/2 years in July as orders increased despite a resurgence in new COVID-19 infections, the Institute for Supply Management said.
Also, manufacturing activity across the euro zone expanded in July for the first time since early 2019, and this prompted John Kilduff, founding partner at Again Capital, to remark, "The industrial sector is picking back up and that portends well for demand going forward".
"The industrial sector is picking back up and that portends well for demand going forward", said John Kilduff, partner at Again Capital LLC in NY.
Coronavirus cases continued to surge in the United States and stood at nearly 18 million globally.
Oil output by the Organization of the Petroleum Exporting Countries rose by over 1 million barrels per day in July as Saudi Arabia and other Gulf members ended their voluntary extra supply curbs on top of an Opec-led deal, and other members made limited progress on compliance. While US shale production is expected to drop in August to about 7.49 million bpd, the lowest in two years, analysts warn that shale producers may start increasing output as crude prices climb higher.
Russian oil and gas condensate output increased to 9.8 million bpd over August 1-2, from 9.37 million bpd in July, a source familiar with data said. Therefore Fusion Media doesn't bear any responsibility for any trading losses you might incur as a result of using this data.
"On the demand side, we had quite encouraging global manufacturing (data) ... but there's still quite a bit of evidence of the oil demand recovery stalling in quite a few markets with a resurgence of COVID-19", said Lachlan Shaw, head of commodity research at National Australia Bank (NAB).