Oil prices lifted on Wednesday following a report showing U.S. fuel stocks fell, much as a build in oil output and a swelling in coronavirus cases, which feed fears of slowing demand, limited gains.
The American Petroleum Institute declared gasoline and distillate fuel storage tumbled, while oil stockpiles climbed.
“Sentiment remains fragile. A surprise increase could well be enough to initiate another downward leg in crude prices,” Jeffrey Halley of broker OANDA said of oil inventories.
Brent crude was trading up by 23 cents, or 0.55%, at $41.95 a barrel by 12:41 West Africa Time, after gaining 28 cents on Tuesday, while United States West Texas Intermediate crude lifted by 14 cents, or 0.35%, to $39.94.
On Tuesday, Bonny Light, Nigeria’s premium crude grade, edged up by 52 cents or 1.28% to $41.06 per barrel but Qua Iboe, another major oil grade, bucked market trend, slipping by $2.04 or 4.77% to $40.74.
Commerzbank’s Carsten Fritsch said “oil prices are still faring comparatively well today given all the headwinds they are facing – a firm U.S. dollar, concerns about demand, rising supply.”
A new wave of infections in nations like Spain, France and India as well as the curbs that Britain has just imposed have lifted concerns regarding demand, even as Libyan oil may raise supply.
Coronavirus casualty figure in the U.S. has surpassed 200,000.
Oil crumbled as the pandemic hobbled demand, with Brent plumbing new depth of below $16 in April, a 21-year low as a matter of fact.
An unprecedented supply cut by the Organisation of the Petroleum Exporting Countries (OPEC) and its Russia-led allies, a cartel known as OPEC+, has supported prices.
OPEC is confronting a new challenge posed by Libya, which has been excused from the output reduction, because the country is looking to ramp up supply on the heels of slowing down of tension in the North African nation. Nevertheless, previous improvements in its peace situation have not endured.
“The road to recovery will be long and bumpy,” said Stephen Brennock of broker PVM.
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