<p>Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market, with Libya's state oil company flagging progress on talks to resume exports.</p>.<p>US West Texas Intermediate (WTI) crude futures fell as much as 44 cents, but recovered slightly after stronger-than-expected Chinese factory data. By 0201 GMT they were trading down 26 cents, or 0.7%, at $39.44 a barrel, having jumped 3% on Monday.</p>.<p>Brent crude futures for September fell 17 cents, or 0.2%, to $41.68 a barrel, paring Monday's 92-cent gain. The less active August contract, which expires on Tuesday, fell 25 cents after gaining 69 cents on Monday.</p>.<p>Optimism on Monday had been based on strong growth in US pending home sales, bolstering belief that global fuel demand is rising steadily as major economies reopen after coronavirus lockdowns.</p>.<p>But at the same time, coronavirus cases continue to rise in southern and southwestern US states.</p>.<p>"It's really difficult to say that demand is a one-way street. There are still plenty of risks going both ways," said Vivek Dhar, mining and energy commodities analyst at Commonwealth Bank of Australia.</p>.<p>Bulls will be looking for more signs of a demand recovery in data due on Tuesday from the American Petroleum Institute industry group, and from the US government on Wednesday.</p>.<p>A preliminary Reuters poll showed analysts expect US crude oil stockpiles fell from record highs last week and gasoline inventories decreased for a third straight week.</p>.<p>On the supply side, investors are watching to see whether Libya, which can produce about 1% of global oil supply, is able to resume exports, blockaded since January amid a civil war.</p>.<p>Libya's National Oil Corp (NOC) said on Monday it was making progress on talks with neighbouring countries to lift the blockade.</p>
<p>Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market, with Libya's state oil company flagging progress on talks to resume exports.</p>.<p>US West Texas Intermediate (WTI) crude futures fell as much as 44 cents, but recovered slightly after stronger-than-expected Chinese factory data. By 0201 GMT they were trading down 26 cents, or 0.7%, at $39.44 a barrel, having jumped 3% on Monday.</p>.<p>Brent crude futures for September fell 17 cents, or 0.2%, to $41.68 a barrel, paring Monday's 92-cent gain. The less active August contract, which expires on Tuesday, fell 25 cents after gaining 69 cents on Monday.</p>.<p>Optimism on Monday had been based on strong growth in US pending home sales, bolstering belief that global fuel demand is rising steadily as major economies reopen after coronavirus lockdowns.</p>.<p>But at the same time, coronavirus cases continue to rise in southern and southwestern US states.</p>.<p>"It's really difficult to say that demand is a one-way street. There are still plenty of risks going both ways," said Vivek Dhar, mining and energy commodities analyst at Commonwealth Bank of Australia.</p>.<p>Bulls will be looking for more signs of a demand recovery in data due on Tuesday from the American Petroleum Institute industry group, and from the US government on Wednesday.</p>.<p>A preliminary Reuters poll showed analysts expect US crude oil stockpiles fell from record highs last week and gasoline inventories decreased for a third straight week.</p>.<p>On the supply side, investors are watching to see whether Libya, which can produce about 1% of global oil supply, is able to resume exports, blockaded since January amid a civil war.</p>.<p>Libya's National Oil Corp (NOC) said on Monday it was making progress on talks with neighbouring countries to lift the blockade.</p>