Crude oil prices drifted lower on Tuesday as worries about outlook for energy demand persisted due to continued surge in new coronavirus cases across the world.
With several states in the U.S. reportedly looking to reconsider their decision to reopen businesses, concerns about energy demand are rising.
Also, reports that Libya is likely to resume oil production weighed on crude prices.
However, despite falling in the session, crude oil futures recorded a whopping 92% gain in the second quarter, recovering smartly after falling to negative rates in early April.
West Texas Intermediate crude oil futures for August ended down $0.43 or 1.1% at $39.27 a barrel.
Libya, which can produce about 1% of global supply, is likely to resume exports. Libya’s National Oil Corporation is hopeful that oil production will resume as a result of talks between the UN, US, France and Egypt to end a blockade by forces based in the east of the North African country.
Testifying before the House Financial Services Committee regarding the response to the coronavirus pandemic, Federal Reserve Chairman Jerome Powell noted that output and employment remain far below their pre-pandemic levels and cautioned that the outlook for the economy is “extraordinarily uncertain.”
“A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities,” Powell said. “The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed,” he added.
Traders were also awaiting weekly inventory reports from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA).