Oil falls on Libyan supply concerns, but upbeat Chinese data curb losses

Oil prices fell on Tuesday, paring some of yesterday's strong gains, on concerns over the Libyan supply, which could worsens the global supply glut, but these losses are being curbed by strong Chinese data on the manufacturing and services sectors for June that showed a quick recovery from the coronavirus impact.

The US crude fell 1.5% to $39.03 a barrel, after it opened at $39.63, and hit an intraday high of $39.78, and Brent futures fell 0.8% to $41.22 a barrel, after opening at $41.58, and hit an high of $41.68.

The US crude has gained 3.8% yesterday, and Brent July futures rose 2.4%, posting the second daily loss in 3 on hopes for the global demand recovery.

The Libyan National Oil Corporation said that progress is being made in talks with neighboring countries to lift the blockade on crude exports, after a suspension since last January due to the armed conflict between internationally recognized Al Wefaq government and Field Marshal Khalifa Haftar's forces.

If the blockade is lifted and production resumed, the Libyan crude supply will return to the global market, which can reach 1% of global supplies, but that level will not be reached unless there's political stability.

Chinese data showed today that the manufacturing sector grew by 50.9 points in June, beating forecasts of 50.4 and exceeding 50.6 in May.

The services sector also grew to 54.4 points in June, at the best pace since November, beating forecasts of 53.3, and higher than May's reading of 53.6.

The data point to a quick recovery by the world's largest oil importer and the second largest consumer from the coronavirus pandemic, which boosts the global oil demand.