Oil rises as U.S. storm eases, but demand worries linger

By Sonali Paul
MELBOURNE, Sept 22 (Reuters) - Oil rose in early trade on
Tuesday, paring sharp overnight losses, as the latest tropical
storm in the Gulf of Mexico lost strength, but worries about
fuel demand persisted with flare-ups around the globe in
coronavirus cases.
U.S. West Texas Intermediate (WTI) crude futures CLc1 for
October, due to expire on Tuesday, rose 26 cents, or 0.7%, to
$39.57 a barrel at 0224 GMT. The more active November contract
CLc2 rose 15 cents, or 0.4%, to $39.69.
Brent crude futures LCOc1 rose 13 cents, or 0.3%, to
$41.57 a barrel.
Crude prices started to recover as Texas refineries stayed
open despite forecasts of heavy flooding, with Tropical Storm
Beta expected to keep losing strength, allaying worries about
U.S. refinery demand for feedstock.
Both oil benchmarks fell around 4% on Monday, hit by rising
concerns that an increase in coronavirus cases in major markets
could spur fresh lockdowns and hurt demand. That raised the
possibility that Libyan oil could return when it isn't needed.
"We had a pretty punchy risk-off session (overnight) ... on
fears around the risk that a COVID resurgence starts to have
negative impacts on demand again," said Lachlan Shaw, National
Australia Bank's head of commodity research.
Markets are nervous about demand in places like the United
Kingdom, where fresh restrictions are being imposed. U.S. health
officials are also warning of a new wave in the coming winter.

"When the virus resurges, governments lock down, impose
restrictions, and individuals and businesses start to retreat.
It's all bad for demand," Shaw said.
Traders will be watching out for the American Petroleum
Institute's data on U.S. oil inventories due later on Tuesday.
API/S EIA/S
U.S. crude oil and gasoline stockpiles likely fell last
week, while inventories of distillates, including diesel, were
seen climbing, a preliminary Reuters poll showed.