Oil struggles to recover after US gasoline stock build
Both contracts shed more than 3% on Wednesday. PHOTO: REUTERS
Oil prices ticked up on Thursday but struggled to fully recover from the previous session’s losses when higher US gasoline inventories signalled a deteriorating demand outlook as coronavirus cases soar.
Brent crude LCOc1 futures were up $0.43 at $42.16 a barrel at 1130 GMT. US West Texas Intermediate (WTI) crude CLc1 futures ticked up $0.44 to $40.47 a barrel.
Both contracts shed more than 3% on Wednesday in their steepest daily falls in three weeks.
US gasoline stocks rose by 1.9 million barrels in the week to October 16, the Energy Information Administration (EIA) said on Wednesday, compared with expectations for a drop of 1.8 million barrels.
Overall product supplies, a proxy for demand, averaged 18.3 million barrels per day (bpd) in the four weeks to October 16, the EIA said, down 13% from the same period a year earlier.
New daily Covid-19 infections hitting records in several US states and in Europe, new lockdowns and China’s clampdown on outbound travel to help stem the spread of the disease, all bode ill for fuel demand.
Worsening the outlook, hopes that US lawmakers would reach an agreement with the White House on an economic stimulus package dimmed late on Wednesday after President Donald Trump accused Democrats of holding up a compromise deal.
“(A deal) might improve the demand tone for a week or two,” said Lachlan Shaw, Head of Commodity Research at National Australia Bank.
Adding to supply concerns, Libyan oil exports are quickly accelerating into October as loading restarts following the easing of a blockade by eastern forces.
Libya has seen production recover to about 500,000 bpd and the government in Tripoli expects that to double by year-end.
Goldman Sachs said it saw average Brent prices rising from $43.9 per barrel this year to $59.4 next year, and WTI from $40.1 to $55.9 per barrel.