Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market, with Libya's state oil company flagging progress on talks to resume exports.
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell as much as 44 cents, but recovered slightly after stronger-than-expected Chinese factory data. By 0201 GMT they were trading down 26 cents, or 0.7%, at $39.44 a barrel, having jumped 3% on Monday, as reported by Reuters.
Brent crude LCOc2 futures for September fell 17 cents, or 0.2%, to $41.68 a barrel, paring Monday's 92-cent gain. The less active August contract, which expires on Tuesday, fell 25 cents after gaining 69 cents on Monday.
Optimism on Monday had been based on strong growth in U.S. pending home sales, bolstering belief that global fuel demand is rising steadily as major economies reopen after coronavirus lockdowns.
On the supply side, investors are watching to see whether Libya, which can produce about 1% of global oil supply, is able to resume exports, blockaded since January amid a civil war.
Libya's National Oil Corp (NOC) said on Monday it was making progress on talks with neighbouring countries to lift the blockade.