Oil prices ticked up on Thursday but struggled to fully recover from the previous session’s losses when a build in U.S. gasoline inventories signalled a deteriorating outlook for fuel demand as coronavirus cases soar.
Brent crude futures were up 22 cents at $41.95 a barrel at 0803 GMT.
U.S. West Texas Intermediate (WTI) crude futures ticked up 17 cents to $40.20 a barrel. Both contracts shed more than 3% on Wednesday in their steepest daily falls in three weeks.
U.S. gasoline stocks rose by 1.9 million barrels in the week to Oct. 16, the Energy Information Administration (EIA) said on Wednesday, compared with expectations for a 1.8 million-barrel drop.
Overall product supplied, a proxy for demand, averaged 18.3 million barrels per day in the four weeks to Oct. 16, the EIA said - down 13% from the same period a year earlier.
New daily COVID-19 infections hitting records in several U.S. states and in Europe, new lockdowns and China’s clamp-down on outbound travel to help stem the spread of the disease, all bode ill for fuel demand.
Worsening the outlook, hopes that U.S. 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 the 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 barrels per day 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.
Additional reporting by Sonali Paul in Melbourne and Roslan Khasawneh in Singapore; Editing by Tomasz Janowski