By Gina Lee
Investing.com – Oil was up on Tuesday morning in Asia, with investors short-covering ahead of an OPEC+ meeting later in the week. But gains were capped by the bleak outlook for global fuel demand.
Brent oil futures edged up 0.15% to $39.67 by 10:14 PM ET (3:14 AM GMT) and WTI futures were up 0.21% to $37.34. Both benchmarks continued to remain below the $40-mark.
COVID-19 continues to hamper fuel demand recovery, with the number of global cases exceeding 29.1 million as of September 15, according to Johns Hopkins University data.
OPEC downgraded its demand forecast on Monday ahead of an OPEC+ joint ministerial monitoring committee (JMMC) on Thursday. The meeting will discuss compliance with April’s production cuts, which were eased in August, but further cuts are not expected.
Oversupply worries also grew after Libyan commander Khalifa Haftar on Sunday committed to ending a blockade of oil facilities in place since January.
But some investors struck a positive note.
“Still, some investors moved to cash in profitable short positions ahead of the OPEC+ meeting,” Nissan (OTC:NSANY) Securities general manager of research Hiroyuki Kikukawa told Reuters.
“Stronger U.S. stock markets also lent support as correlation between stock and oil markets has been high lately,” he added, referring to U.S. stocks ending higher on Monday due to rising hopes for a COVID-19 vaccine.
Meanwhile, the weather is also playing a part in disrupting supply, with a second hurricane in less than a month in the Gulf of Mexico area forcing energy companies, port and refineries to shut down their facilities. Hurricane Sally, which has intensified into a category 2 storm, is expected to make landfall later in the day. It is the second hurricane since Hurricane Laura hit the area four weeks ago.
While the shutdown of facilities provided temporary relief from the oversupply worries, investors now await crude oil supply data from the American Petroleum Institute (API), due later in the day.