By Gina Lee
Investing.com – Oil was up Tuesday morning in Asia, but the rising number of COVID-19 cases in Europe is raising fuel demand concerns. The U.S. is also contemplating releasing crude reserves and increasing supply to curb soaring gasoline prices.
Brent oil futures rose 0.96% to $82.88 by 9:48 PM ET (2:48 AM GMT) and WTI futures were up 0.83% to $80.41.
Europe is facing a fourth wave of COVID-19 cases, with Austria introducing a nationwide lockdown for its unvaccinated population. China, the world’s top importer of oil, also continues to battle its latest COVID outbreak.
“Crude oil fell as U.S. President Joe Biden faced increasing pressures to tap the U.S. Strategic Petroleum Reserve (SPR) to quell rising gasoline prices. Sentiment was also hit by new restrictions on travel in Europe,” ANZ analysts said in a note.
However, other investors argued that the impact of the potential SPR release on the market would be temporary.
“The anticipated SPR release has been largely priced into the market at this point. As time goes by and the release does not happen the market will likely drift higher,” CIBC Private Wealth Management senior energy trader Rebecca Babin told Reuters.
During the previous week, the Organization of the Petroleum Exporting Countries also cut its world oil demand forecast for the fourth quarter by 330,000 barrels per day (bpd) from October’s forecast.
Demand is declining as supplies are expected to increase. U.S. energy firms added oil and natural gas rigs for a third week in a row during the previous week, while Rystad Energy said that U.S. shale production in December is expected to reach pre-COVID-19 levels of 8.68 million bpd.
Investors now await U.S. crude oil data from the American Petroleum Institute, due later in the day.