Oil prices jumped early on Tuesday, with Brent back above the $40 a barrel mark, supported by a rally in financial markets and a weaker U.S. dollar on Election Day.

WTI Crude settled UP $.85 at $37.66 and Brent Crude was rallied to $40.11, returning to above $40 for the first time in a week.

On Monday,oil prices dropped in early trading as more European countries announced lock downs, but oil closed higher after the U.S. financial markets rebounded later on Monday. Today, oil prices rallied early on U.S. Election Day as equity markets around the world and in the U.S. also rose, with traders bracing for the outcome of the election. Commenting on the move in oil prices early on Tuesday, Tamas Varga with oil brokerage PVM told Reuters: “The jump has borne all the hallmarks of a massive, logical and even inevitable short-covering prior to the U.S. presidential elections.” According to the analyst, Tuesday’s oil rally is exclusively due to the U.S. election, not a recovery from the slump in oil prices last week.

The bearish factors for oil are still very much present, with Italy also tightening measures to curb the second coronavirus wave, but stopping short of a nationwide lockdown, for now. The UK, Austria, and Belgium joined this weekend France and Germany in announcing second lockdowns amid surging coronavirus cases. The market fears that the return of the lockdowns will further delay the economic and oil demand recovery.

In addition, Libyan crude oil production is estimated to have jumped to 800,000 barrels per day. (bpd), rising by 100,000 bpd over the past few days, and putting pressure on oil prices from the supply side.

One bullish factor which continued to support the market on Tuesday is that Russia is reportedly considering the idea that OPEC+ delay the easing of the production cuts. The top executives of Russia’s oil companies discussed on Monday the future of the OPEC+ deal with Russian Energy Minister Alexander Novak, including an option to extend the cuts as-is for three months until March 2021, instead of easing the cuts from January as planned, sources with knowledge of the matter told Russian news agency Interfax.