Oil edged up to around $42 a barrel on Wednesday supported by rising investor risk appetite and a report that U.S. fuel inventories fell, although rising crude supply and concern of stalling demand capped gains, reports Reuters.
A rise in European equities
European equities rose after better-than-expected German manufacturing data, giving oil a boost.
The American Petroleum Institute said U.S. inventories of gasoline and distillate fuel dropped, while those of crude rose.
“The rebound in risk appetite today is lifting oil prices a little,” said Craig Erlam, an analyst at broker OANDA.
Crude prices have gone up
Brent crude was up 8 cents, or 0.2%, at $41.80 at 1155 GMT, reversing an earlier drop.
U.S. West Texas Intermediate crude was up 9 cents at $39.89. Both contracts fell more than 4% on Monday, though they rose on Tuesday.
COVID’s effect on oil prices
Surging COVID-19 infections in countries including India, France, and Spain and new restrictions in Britain have renewed worries about demand, just as more supply may come from Libya.
“Oil prices are still faring comparatively well today given all the headwinds they are facing – a firm U.S. dollar, concerns about demand, rising supply,” said Carsten Fritsch of Commerzbank.
Oil collapsed as the pandemic decimated demand, with Brent falling below $16, 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 in that Libya, an OPEC member exempt from the supply cut, is aiming to boost supply after an easing of the country’s conflict.
Still, previous recoveries have not lasted.
It’s Free! Click here to Subscribe!
Source: Reuters
