By Gina Lee
Investing.com – Oil was up on Monday morning in Asia, with another storm in the Gulf of Mexico forcing rigs to shut down for the second time in less than a month. But the black liquid’s gains were capped by continuing oversupply fears and a slow recovery in global fuel demand.
Brent oil futures edged up 0.15% to $39.89 by 10:05 PM ET (3:05 AM GMT), reversing earlier losses. WTI futures were up 0.46% to $37.50. Both benchmarks ended last week lower, a second consecutive week of declines, and remain below the $40-mark.
Tropical Storm Sally is gaining strength in the Gulf of Mexico and is forecast to be a category 2 hurricane. This is the second weather disruption to oil production in less than a month, with Hurricane Laura forcing shutdowns less than three weeks earlier. Sally is expected to make landfall near New Orleans on Tuesday.
Investor worries over an oversupply are sustained by the ongoing COVID-19 pandemic continuing to hamper fuel demand recovery and builds in crude oil supply reported during the previous week by both the American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA).
They were especially focused on the U.S., the world’s biggest oil producer and consumer.
“A lacklustre driving season in the U.S. has seen the market reassess its view of U.S. demand,” ANZ Research said in a note.
“With U.S. refiners now shutting down for maintenance, crude demand is likely to remain soft,” the note added.
Meanwhile, Libyan commander Khalifa Haftar on Saturday committed to ending a blockade of oil facilities that has been in place since January. The lifting of the blockade could add further oversupply pressure to the market, but Haftar’s statement did not specify whether oil fields and ports would also recommence operations.
Meanwhile, investors are looking to OPEC’s monthly monitoring meeting, scheduled for Thursday, for further guidance.