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Brent crude futures rose $1.13, or 2.9% to $40.10 a barrel at
1138 GMT on Tuesday, while U.S. West Texas Intermediate (WTI)
crude futures were up $1.13, or 3.1%, to $37.94 a barrel. Both
benchmarks gained nearly 3% on Monday.
"The jump has borne all the hallmarks of a massive, logical and
even inevitable short-covering prior to the U.S. presidential
elections," Tamas Varga of oil brokerage PVM said.
"It would be tempting to conclude that the recovery from last
week's slump is now under way, but it is simply not a plausible
scenario," he added.
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.
Benchmark prices, down sharply over the last week, had a brief
reprieve on Monday after Russia's oil minister held talks with
domestic oil companies on a possible extension of oil output
restrictions into the first quarter of 2021.
The Organization of the Petroleum Exporting Countries and allies
including Russia, a group called OPEC+, cut oil output from May
to support prices and reduced the reduction to 7.7 million
barrels per day (bpd) in August. They are due to shrink the cuts
by 2 million bpd in January.
"The hope is now that a continued cut at current levels will be
the necessary bridge over the second COVID-19 wave until
vaccines are rolled out during [the first half of 2021],"
Commerzbank said.
Rising production from Libya, which is on course to hit 1
million bpd in the coming weeks, from just 100,000 bpd in early
September, will also be a concern for OPEC+.
OPEC+ holds its next full meetings on Nov. 30 and Dec. 1.
(Additional reporting by Sonali Paul and Koustav Samanta,
editing by Louise Heavens and Barbara Lewis)
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