Oil prices have been falling on Tuesday as COVID-19 cases continue to rise, undermining long-term demand.
Over 1 million people have died of COVID-19 worldwide as of Tuesday, according to Reuters. Healthcare officials say fatalities and infections are continuing to rise as governments struggle to contain the spread.
Watch: Global coronavirus deaths pass one million
In August, Brent and West Texas Intermediate price reached their highest levels since early March after optimism following rising fuel demand and the largest oil producers’ public promises for supply cuts. Since then, the outlook has taken a hit over mounting pandemic-related demand fears, leading to the price dropping by about $3 per barrel.
Pandemic concerns are also outweighing any short-term positive impact a US stimulus package could have on oil prices. Commodities temporarily gained earlier in the week as Democratic lawmakers unveiled a new $2.2tn (£1.7tn) coronavirus relief bill, which US House of Representatives speaker Nancy Pelosi said was a compromise measure.
“If it happens, the US stimulus checks will go a long way to shoring up US oil demand at a most critical juncture and could move oil prices back into a pre-September frame of mind,” said AxiCorp market strategist Stephen Innes, in a note.
Oil watchers are now focused on any signs of renewed demand in the US.
Data from the American Petroleum Institute out on Tuesday and the Energy Information Administration on Wednesday will be two key indicators.
A geopolitical dispute between Armenia and Azerbaijan over the Nagorno-Karabakh region is also in focus. Azerbaijan is a major energy producer and possesses critical pipelines for transporting oil and gas to global markets. Analysts are currently playing down fears that the tension could lead to a material disruption.
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