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Oil falls as U.S. fiscal package faces tough talks

Oil falls as U.S. fiscal package faces tough talks

Oil prices fell on Tuesday, as U.S. lawmakers prepared to wrangle over an economic stimulus package and investors worried about a rise in coronavirus cases worldwide.

  • Reuters
  • Last Updated: July 28, 2020, 7:22 PM IST
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LONDON Oil prices fell on Tuesday, as U.S. lawmakers prepared to wrangle over an economic stimulus package and investors worried about a rise in coronavirus cases worldwide.

Brent crude was down 4 cents, or 0.1%, at $43.37 a barrel at 1331 GMT, while West Texas Intermediate (WTI) U.S. crude fell 36 cents, or 0.9%, to $41.24 a barrel.

“Oil continues to trade in a range with its supply fundamentals helping to set a floor while the economic and demand outlook is providing the cap,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.

U.S. Republicans and Democrats faced difficult talks on Tuesday on how best to recover from the coronavirus pandemic, after Republicans unveiled a relief proposal four days before millions of Americans lose unemployment benefits.

Investors also awaited the outcome of the U.S. Federal Reserve’s policy-setting panel meeting on Tuesday and Wednesday. The panel is expected to reiterate that interest rates will remain near zero for years to come.

Brent crude was deeper in contango, a market structure in which the future price of the commodity is higher than the spot price, encouraging a build up of inventories.

October prices as much as 49 cents per barrel above September levels, compared to a 1 cent difference in early July.

“This suggests that the tightening we were seeing in the market has eased somewhat, with the demand outlook more uncertain given the resurgence of COVID-19 cases in some regions,” said Warren Patterson, ING’s head of commodities strategy.

U.S. inventory data may show refined product stockpiles declined last week, while crude oil stockpiles are expected to have held steady, five analysts polled by Reuters estimated.

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On the downside for fuel demand, Europe’s largest low-cost airline Ryanair cut its annual passenger target on Monday by a quarter and warned that a resurgence in coronavirus infections could lower that further.

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  • First Published: July 28, 2020, 7:22 PM IST
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