Oil prices settled higher on Wednesday as U.S. gasoline consumption showed signs of a recovery, but price gains were limited by rising crude inventories and an increase in coronavirus infections.
Both benchmarks were on track for a fourth session of daily percentage changes of less 1% in either direction, shrugging off news that OPEC member Libya was adding to global supplies by reopening its Es Sider oil terminal for exports.
U.S. gasoline inventories tumbled by 4.8 million barrels as demand climbed to 8.8 million barrels per day, the highest since March 20, according to data from the Energy Information Administration released Wednesday.
Refinery utilization increased by 2% but was still hovering approximately 17% lower than in the same period last year.
“While a big draw on gasoline in the summertime is healthy, the U.S. is really close to all time record highs in crude oil and distillate storage, which is not as healthy,” said Bob Yawger, director of energy futures at Mizuho.
U.S. Gulf Coast crude oil stockpiles rose by 5 million barrels to a record high last week, the data showed.
“The reduction of crude storage held on sea is simply shifting to land at this point which is not necessarily a bearish omen,” said Tony Headrick, energy markets analyst at CHS Hedging.
The latest surge in U.S. coronavirus cases, taking the U.S. total above 3 million, has reduced hopes for a swift recovery in oil demand which has been hammered by the global lockdowns to prevent the virus spreading.
Key ministers in OPEC+, which includes OPEC, Russia and other producers, were due to hold talks next week about their deal on record output cuts that will run to the end of July and then start tapering.
Today morning oil prices drifted lower for a start on Thursday as concerns about renewed COVID-19 lockdowns in the United States outweighed signs of a recovery in U.S. gasoline demand. But after a few hours trading the oil price is unchanged, not knowing which way to go.
The market’s struggling to get strong conviction to the upside since there is mixed evidence on demand.
A spike in COVID-19 cases across several U.S. states, however, raised the prospect of renewed lockdowns that would likely hold back any sustained recovery in fuel demand. That has kept the benchmark crude contracts in tight ranges this week, although holding above $40 a barrel.
The market is also in a holding pattern ahead of a meeting on July 15 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Together called OPEC+, the producers could decide to pare or extend their record 9.7 million bpd supply cut from August.
The panel has been pressing OPEC+ over-producers, such as Iraq and Nigeria, to improve their compliance with the curbs.
Oil Future close 8th July, 2020
Brent crude: $43.29 (+0.21) Front Month contract with delivery Sep
Light crude (WTI): $40.90 (+0.28) Front Month contract with delivery Aug
Gasoil ARA; $ 367.75 (-2.75) Front Month contract with delivery Jul
NY Harbor Ulsd: $ 379.90 (-2.86) Front Month contract with delivery Aug
The Oil Market is trading at GMT 05.46: Brent -2 cents and WTI -5 cents
Oil Future crude oil, Brent and WTI closed slightly upward and the MGO closed slightly down. – Expect bunker prices little change also today.