WASHINGTON (DTN) -- Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange were mixed in early trade Tuesday, with the November West Texas Intermediate trading near $41 barrel (bbl) ahead the contract's expiration Tuesday afternoon as traders monitor the progress on U.S. fiscal stimulus talks and surging coronavirus cases across the European Union that have triggered sweeping new lockdowns in Ireland and northern Italy.
In early trade, November WTI futures were modestly higher just below $41 bbl, with the December contract narrowing its premium with the expiring contract to less than 20 cents. The December Brent contract on ICE slipped to $42.50 bbl. NYMEX November ULSD futures softened to $1.1570 gallon and November RBOB futures traded 0.8 cents higher near $1.1700 gallon.
The U.S. dollar continued lower in overnight index trade against a basket of six global currencies to 93.240, lending support for WTI futures.
Oil prices have struggled to break out of their recent trading ranges amid growing uncertainty over the prospects for a U.S. stimulus package ahead of the presidential election Nov. 3 and resurging coronavirus cases in parts of Europe and the United States. This week, Ireland, Wales and the Lombardy region of Italy announced sweeping new lockdowns to halt the spread of infections, ordering their residents to refrain from all nonessential travel and reclosing businesses. These are the strictest quarantine measures so far introduced since "the great lockdown" of March-April when global oil demand collapsed 30% as economic activity and personal mobility were brought to a virtual standstill.
During the Joint Ministerial Monitoring Committee meeting Monday, oil ministers from the Organization of the Petroleum Exporting Countries and Russia-led partners stressed the potentially devastating effects a second wave of infections would have on a faltering demand recovery in the fourth quarter, calling the market's condition extremely fragile. For now, OPEC+ is sticking with a deal to curb output by 7.7 million barrels per day (bpd) through December, and then tapering the cuts to 5.7 million bpd in January.
Also weighing on crude futures is rising oil production in Libya, where output is climbing at a significant pace after a breakthrough in peace talks between rebel forces led by General Khalifa Haftar and the United Nations recognized government in Tripoli. This week, Libya's National Oil Company plans to restart the 70,000 bpd Abu Attifel oil field that should bring the country's total oil production above 400,000 bpd by the end of this month, a sharp recovery from output under 90,000 bpd prior to the lifting of a naval blockade at Libyan ports in September.
Against those headwinds, some traders are betting on a last-minute breakthrough in stimulus talks in the United States ahead of a deadline set for Tuesday by House Speaker Nancy Pelosi. The speaker has refused to back down from her demand for a $2.2 trillion stimulus, while the White House has lifted its offer to $1.9 trillion, although the Republican-controlled Senate is favoring a smaller $500 billion relief package.
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