Oil prices edged higher on Wednesday, supported by U.S. government data that showed crude and fuel inventories dropped last week, though concerns about the ongoing coronavirus pandemic capped gains.
Brent crude LCOc1 rose 5 cents to settle at $41.77 a barrel. U.S. West Texas Intermediate crude CLc1 gained 13 cents to settle at $39.93 a barrel.
U.S. crude, gasoline and distillate inventories all fell last week, Energy Information Administration data showed. Crude inventories USOILC=ECI fell by 1.6 million barrels, less than forecast; gasoline stocks USOILG=ECI dropped more than expected, sliding by 4 million barrels; while distillate stockpiles USOILD=ECI posted a surprise drawdown of 3.4 million barrels.
“The big surprise was the distillates were well below average,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
But rising COVID-19 infections in countries including India, France and Spain and new restrictions on businesses in Britain have renewed worries about demand, just as more supply may come from Libya. In the United States, the death toll has passed 200,000.
U.S. business activity nudged down in September, suggesting a loss of momentum in the economy as the third quarter draws to a close and the pandemic lingers.
Meanwhile, China’s diesel exports in August doubled the levels of July to 1.09 million tonnes, customs data showed on Wednesday, as refiners shipped fuel overseas despite poor export margins to reduce brimming domestic oil product inventories.
Oil had collapsed as the pandemic decimated demand, with Brent falling below $16 a barrel, a 21-year low, in April. A record output cut by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, has helped revive prices.
OPEC faces a new challenge as Libya, an OPEC member that is exempt from the supply cut, is aiming to boost supply after an easing of the country’s conflict. An oil tanker is expected to load crude at Libya’s Marsa el-Hariga terminal this week, the first since January.