Oil prices fell on Tuesday amid fears that a fresh recovery in fuel demand could stall due to rising coronavirus cases. This came as major oil producers increased output while many countries in the world tightened lockdowns.
U.S. West Texas Intermediate crude futures slid 0.7%, or 30 cents, at $40.71 per barrel. Brent crude futures lost 0.8%, or 37 cents, at $43.78 per barrel.
The decline in oil prices came after WTI and Brent gained 1.8% and 1.5%, respectively over the release of manufacturing data in the United States, Europe, and Asia. The better-than-expected figures hinted at a rebound in factory activity from the impact of the coronavirus pandemic.
Cities from Manila to Melbourne have tightened lockdowns to control the rising cases, adding to fuel demand worries.
Analysts expect that U.S. refined product inventories rose last week ahead of the release of data from the American Petroleum Institute. Analysts estimate that U.S. gasoline stockpiles rose by 600,000 barrels, distillate inventories including diesel and heating oil increased by 800,000 barrels, while crude stocks dropped by 3.3 million barrels in the week ended July 31.
Meanwhile, OPEC+ producers are set to ramp up production by nearly 1.5 million bpd, while U.S. producers plan to reopen shut-in production.