Oil slips, unable to rebound from Monday's losses as COVID cases pick up

NEW YORK: Oil prices edged lower on Tuesday ahead of weekly US inventory figures, as the market was unable to rebound from Monday's selloff driven by a surge in overseas coronavirus infections.

Brent crude fell 7 cents to $41.37 per barrel by 1:24 p.m. EDT (1724 GMT). US West Texas Intermediate crude (WTI) for October, due to expire on Tuesday, fell 18 cents to $39.13.

Traders are operating cautiously ahead of industry data from the American Petroleum Institute on US oil inventories due later on Tuesday, according to Bob Yawger, director of energy futures for Mizuho in New York. Official data will follow on Wednesday.

US crude oil and gasoline stockpiles likely fell last week, while inventories of distillates, including diesel, were seen climbing, a Reuters poll showed.

"The market is teetering on the edge here, with bloated supplies and weak demand making refiners kill for a reason not to run their plants right now," said Yawger.

The market traded higher earlier in the session as analysts noted lockdown restrictions in Europe would have only a limited impact on fuel demand, but the market could not hold the gains.

"As any new restrictions will likely be more localised, the oil demand recovery should still continue, although at a slower pace with the easiest demand gains behind us," UBS oil analyst Giovanni Staunovo said.

Market participants are nervous about fuel demand in countries such as Britain, where the government will tell people to work from home again and will impose new curbs on bars and restaurants. Infections are rising in several other European countries, including France and Spain.

The easing of an oil blockade in Libya also pressured prices on Monday, but analysts said they expected Libyan exports were unlikely to quickly reach the levels seen before the conflict.