Oil rose Tuesday, bouncing after a sharp selloff in the previous session sparked by renewed lockdown measures in Europe as COVID-19 cases rose.
West Texas Intermediate crude for November delivery on the New York Mercantile Exchange rose 40 cents, or 1.1%, to $39.94 a barrel, while November Brent crude was up 46 cents, or 1.1%, at $41.90 a barrel, the global benchmark, on ICE Futures Europe. Crude fell more than 4% on Monday.
While the bounce Tuesday is welcome for oil bulls, analysts said uncertainty around the outlook for both demand and supply was likely to keep a lid on the market in the near term.
The measures “put in place to curb the corona pandemic have a direct and comparatively marked impact on oil demand,” said Barbara Lambrecht, analyst at Commerzbank, in a note.
British pubs will be required to close early and people who violate rules will face stiff fines under new lockdown restrictions put in place to halt a surge in new COVID-19 cases. Other European countries have taken limited steps to squelch a pickup in new infections.
Supply concerns also remain, with Libya expected to boost output nearly threefold to 300,000 barrels a day as a military commander who controls the eastern portion of the country ends a blockade of ports.
“The return of Libyan oil exports will force OPEC+ to take action to offset this additional supply by making corresponding cuts elsewhere,” Lambrecht wrote. “After all, its objective of rebalancing the market risks being jeopardized by the cooling of oil demand that is feared. So far, the oil market appears convinced that the production cartel is willing and able to act.”