Oil prices dip on demand woes, Libya in talks to resume supply

Oil prices fell on Tuesday amid fading hopes for an increase in demand, while a buildup of stockpiles weighed the market.

U.S. West Texas Intermediate crude futures slipped by 44 cents, but recovered a portion of its losses after China posted better-than-expected factory data. As of 0201 GMT, it traded 0.7% (26 cents) lower at $39.44 per barrel, after gaining 3% on Monday.

Brent crude futures for September lost 0.2% (17 cents) to $41.68 per barrel, trimming its 92-cent gain from Monday. The less-active August contract, which is due to expire on Tuesday, lost 25 cents after it rose by 69 cents on Monday.

Monday’s optimism came from the growth of pending home sales in the U.S., strengthening hopes that global oil demand could rise steadily as major economies eased lockdown measures. However, rising COVID-19 cases in the southern and southwestern states in the U.S. limited optimism.

Meanwhile, Libya’s National Oil Corp (NOC) said on Monday that it was closing in on talks with neighboring countries to resume exports that have been halted since January due to a civil war. Libya is able to produce nearly 1% of the world’s oil supply.