Oil prices edge higher as U.S. inventory drop counters demand concerns tied to COVID-19
Oil prices climbed on Wednesday after a surprise drop in U.S. crude inventories was enough to offset concerns about U.S. fuel demand amid record increases in COVID-19 infections in some states.
Brent crude futures LCOc1 were up by 18 cents, or 0.4%, at $43.40 a barrel by 0644 GMT. U.S. West Texas Intermediate crude futures CLc1 gained 12 cents, or 0.3%, to $41.16 a barrel.
Inventories of crude oil in the United States dropped by 6.8 million barrels last week to 531 million barrels, data from industry group the American Petroleum Institute showed on Tuesday.
Analysts’ expectations were for an increase of 357,000 barrels. U.S. government data is due Wednesday.
But, the raging COVID-19 pandemic is keeping alive concerns about falling fuel demand causing an oversupplied market as record numbers of coronavirus infections are reported globally, including in the U.S., the world’s biggest consumer of oil.
“It is becoming more apparent that the demand recovery many were expecting in oil over the second half of the year was just too optimistic,” ING Research said.
“A resurgence in COVID-19 cases, along with continued travel restrictions has meant that this demand recovery has stalled, or at least slowed,” ING said.
Four U.S. states reported one-day records for coronavirus deaths on Tuesday and cases in Texas passed the 400,000 mark.
Attempts to provide relief amid the outbreak were in disarray as Republicans in the U.S. disagreed over their own plan for providing $1 trillion in new coronavirus aid on Tuesday.
Analysts are concerned about the risks to any U.S. recovery, while a new Federal Reserve policy statement due to be released later on Wednesday afternoon will show how seriously central bankers assess them.
In Hong Kong, the government on Wednesday warned the city is on the edge of a large-scale coronavirus outbreak and urged people to stay indoors as much as possible.
