With soaring cases of Covid-19 in Europe and the United States and the recent swift return of oil supply from Libya following an eight-month blockade, Saudi Arabia and Russia are in favour of delaying the output increase in January
Oil prices slipped on Tuesday as worries about soaring Covid-19 cases, rapidly rising Libyan supply and US election jitters outweighed growing hopes that major producers would hold back on planned production increases.
US West Texas Intermediate (WTI) crude futures slipped 6 cents, or 0.2%, to $36.75 a barrel at 0159 GMT, while Brent crude futures fell 15 cents, or 0.4%, to $38.82.
Italy is the latest country in Europe to tighten Covid-19 restrictions, including limiting travel between the worst-hit regions and imposing a nightly curfew, which will limit fuel demand.
"Demand has hit a speed hump as the resurgence in coronavirus cases around the world has resulted in new lockdowns," ANZ Research said in a note.
Benchmark prices, down sharply over the past week, had a brief reprieve on Monday, rising nearly 3% after Russia's oil minister held talks with domestic oil companies to delay crude output increases planned for January.
Russian Energy Minister Alexander Novemberak met with the top managers of Russian oil companies on Monday to discuss a possible extension of oil output restrictions into 2021, sources told Reuters.
"The Kremlin has effectively stopped two gaps with one bush - defend oil prices and effectively intervene in the rouble's precipitous decline," said Stephen Innes, chief market strategist at Axi.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a grouping called OPEC+, slashed oil output from May to support prices and tapered the cut to 7.7 million barrels per day (bpd) in August. They are due to pare that further by 2 million bpd in January.
But with soaring cases of Covid-19 in Europe and the United States and the recent swift return of oil supply from Libya following an eight-month blockade, Saudi Arabia and Russia are in favour of delaying the output increase in January.
OPEC holds its next full meeting on November. 30.
In another bearish sign, seven analysts polled by Reuters estimated US crude stocks likely rose by about 2 million barrels in the week to October 30.
US inventory data is due from the American Petroleum Institute on Tuesday and the Energy Information Administration on Wednesday.