Oil prices turned lower on Tuesday as growing COVID-19 cases rekindled fears of a stalled demand recovery while the markets and the world prepare to watch the first U.S. presidential debate later today.
As of 10:48 a.m. EDT on Tuesday, WTI Crude was down 2.68 percent at $39.51 and Brent Crude was trading down below $42, at $41.49, down 2.22 percent on the day.
Meanwhile, U.S. benchmark natural gas prices were down 7.37 percent at $2.589/MMBtu as the October futures contract rolled out, and the November contract became the front-month futures contract. Currently, overall U.S. natural gas demand is estimated at low to moderate by NatGasWeather.com, but demand is set to increase to high later this week with a stronger cold shot pushing into the Great Lakes and the East Thursday through Sunday with lows in the 30s and 40s, and in some places in the 20s.
Oil prices fell on Tuesday, after hitting a week-high on Monday due to strong equity markets, a weaker U.S. dollar, and the proposal of House Democrats of a new stimulus package worth US$2.2 trillion.
On Tuesday, investors and speculators are waiting for the first Trump-Biden presidential debate, while resurging coronavirus cases in major European economies are dragging market sentiment down. The continued increase of Libya’s oil production at times of uncertain global demand recovery is also weighing on prices.
“Brent currently trades in a relative tight range with resistance being concentrated around $43.5/b where the 50 and 200-day moving averages meet. Downside support at $41.50/b (100-DMA) followed by $39.50/b,”
John Hardy, Head of FX Strategy at Saxo Bank, said on Tuesday.
The next immediate catalyst for oil prices will be the weekly inventory estimate of the American Petroleum Institute (API) on Tuesday. Expectations are centered around a crude oil inventory build of some 1 million barrels last week, according to ING.
By Tsvetana Paraskova for Oilprice.com
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