Oil futures pulled back early Tuesday as persistent concerns about the rising number of cases of COVID-19 and the threat of more oil flowing out of the Middle East more than offset upbeat data suggesting both China’s manufacturing and service sectors are recovering.
The global tally for confirmed cases of the coronavirus that causes COVID-19 rose to 10.3 million on Tuesday, according to data aggregated by Johns Hopkins University. The number of deaths climbed to 505,518, while the number of people who have recovered reached 5.2 million.
A steady climb in the number of infections has raised the threat of delaying or reversing efforts to reopen economies that have been facing lockdowns to curb the coronavirus pandemic.
On top of that, investors were monitoring Libya to see if the oil exporter would resume oil production which has been almost entirely blockaded since January amid the country’s civil war, Reuters reported.
Meanwhile, China’s official manufacturing purchasing managers for June rose to 50.9 from 50.6 in May, while the services PMI rose to 54.4 from 53.6, suggesting the second-largest economy and biggest importer of oil is continuing to show signs of recovery from the virus that was first identified in Wuhan.
Optimism around those results hasn’t, however, taken focus away from the resurgence of the epidemic in parts of the U.S., commodity investors say.
“The relatively promising economic data cannot shake off the fear of a second wave of the Covid-19, especially in the US, which is again imposing social distancing restrictions in big economic states like California, Texas, and Florida,” wrote Louise Dickson, oil markets analyst at Rystad Energy, in a Tuesday research report.
On Tuesday, West Texas Intermediate crude for August fell 59 cents, or 1.5%, at $39.10 a barrel on the New York Mercantile Exchange, cutting in half a 3.1% gain from Monday.
Global benchmark Brent oil for August delivery shed 58 cents, or 1.4%, to trade at $41.28 a barrel on ICE Futures Europe, nearly erasing all of its 1.7% gain from the previous session.
Some experts say that Tuesday’s pullback may reflect so-called profit-taking after strong gains on Monday to start the week.