Oil prices fell on Tuesday amid concerns that a surge in new coronavirus cases, especially in the United States, will hamper any recovery in fuel demand.
Brent crude futures declined by 44 cents, or 1.02%, to $42.66, by 0935 GMT, after hitting a high of $43.19.
U.S. West Texas Intermediate (WTI) crude futures fell 53 cents, or 1.3%, to $40.10 a barrel, after a high of $40.79.
“Oil prices are lower today on concerns that the surge in coronavirus cases in the U.S. will limit a recovery in fuel demand,” bank RBC said.
Sixteen U.S. states have reported record increases in new COVID-19 cases in the first five days of July, according to a Reuters tally.
Florida is re-introducing some limits on economic reopenings to grapple with rising cases. California and Texas, two of the most populous and economically important U.S. states, are also reporting high infection rates as a percentage of diagnostic tests conducted over the past week.
Other parts of the world, such as Australia, have also been hit by a resurgence in new infections.
Saudi Arabia raised its August crude official selling prices on Monday in a sign it sees demand picking up. But some analysts said the move could weigh on already poor margins for refiners.
“While record output cuts from the Saudis and the rest of OPEC+ support the idea of stronger differentials, this again will not be welcome news for refiners, doing little to help their margins, which are already under significant pressure,” bank ING said.
The U.S. crude market faces some uncertainties from a court decision on Monday ordering the shutdown of the Dakota Access pipeline, the biggest artery transporting crude oil from North Dakota’s Bakken shale basin to the Midwest and Gulf Coast regions, due to environmental concerns.
Market sources in the Bakken said the closure of the 570,000-bpd pipeline, while an environmental impact statement is completed, will likely divert some oil flows to transportation by rail.
Additional reporting by Sonali Paul and Seng Li Peng; editing by Jason Neely