Oil prices have inched lower due to faded optimism on fuel demand recovery and the prospect of Libyan supply return.
Brent crude fell by $0.17 or 0.2% at $41.68 a barrel, while US West Texas Intermediate (WTI) crude futures were down by $0.26 or 0.7% to $39.44 a barrel.
A looming rise in supply weighed on the oil market as Libya’s National Oil Corporation (NOC) confirmed international talks to restart exports.
The resumption of oil output by Libya is set to end a blockade, which was put in place since January by eastern-based forces in the civil war that has stopped most of the energy exports for six months.
Optimism on 29 June was based on easing the coronavirus-related lockdowns by major economies, increasing hopes that fuel demand is steadily rising.
Simultaneously, Covid-19 cases continue to surge in the southern and southwestern states in the US.
Commonwealth Bank of Australia mining and energy commodities analyst Vivek Dhar said: “It is really difficult to say that demand is a one-way street. There are still plenty of risks going both ways.”
Meanwhile, market investors are awaiting demand recovery data from the industry group American Petroleum Institute (API) due to be released on 30 June and data from the US government on 1 July.
The Organization of the Petroleum Exporting Countries (OPEC), including Russia and other producers, together known as OPEC+, have been reducing supply by approximately 9.7 million barrels per day (mbps) since 1 May.
Earlier this month, the group also agreed to extend output cuts until the end of next month.