Oil Steady as U.S. Storm Eases 

Oil futures were steady on Tuesday in energy commodities after sharp overnight losses. The latest tropical storm in the Gulf of Mexico had already lost strength. But worries about fuel demand continued as COVID-19 cases flared around the globe.

Brent crude futures (LCOc1) inched 3 cents, or 0.1%, lower to $41.41 a barrel at 0637 GMT.  This reversed earlier small gains.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) for October, slid 4 cents, or 0.1%, to $39.27 a barrel. This October contract is due to expire on Tuesday. Moreover, the November contract which is more active, shed 3 cents, or 0.1%, to $39.51.

Crude prices fell about 4% on Monday and won some respite. Texas refineries stayed after a tropical storm was expected to subside, reducing worries about U.S. refinery demand for feedstock.

Concerns about global demand, however, predominated.

The recovery in sentiment after the rout in risk assets seen a fortnight ago was clearly fragile. This was a statement from Vandana Hari, energy analyst at Singapore-based Vanda (NASDAQ:VNDA) Insights.

This week, the market is recalibrating to a likely stalling of the economic recovery in Europe, the analyst said.  Several countries in the region impose fresh restrictions to contain a surge in the coronavirus, Hari added.

Oil Price Slump

Commodity news reports Monday’s price slump was triggered by worries on an increase in the COVID-19 cases in major markets. Markets feared that this could lead to fresh lockdowns and hurt demand.

That raised the possibility that a return of Libyan oil could come when it isn’t needed. The country is looking to ramp up exports.

Lachlan Shaw, National Australia Bank (OTC:NABZY)’s head of commodity research said they had a pretty punchy risk-off session. They fear that a COVID resurgence is starting to have negative impacts on demand again.

Markets are anxious about demand in places like the United Kingdom where restrictions are being imposed again. Moreover, U.S. health officials also warn of a new wave in the coming winter.

Traders are bracing for the American Petroleum Institute’s data on U.S. oil inventories due later on Tuesday.

A preliminary poll showed inventories of distillates including diesel were increasing. With that, U.S. crude oil and gasoline stockpiles likely fell in commodities last week after the poll results.