Oil prices extend rally ahead of U.S. election | Reuters

Oil prices extend rally ahead of U.S. election | Reuters

Oil prices extended their rally on U.S. Election Day amid a recovery in financial markets on Tuesday, but concerns over surging coronavirus cases around the world capped further gains.

Brent crude LCOc1 futures rose 70 cents, or 1.8% to $39.67 a barrel at 0845 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 futures were up 78 cents, or 2.1%, to $37.59 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.