Oil prices dipped on Wednesday after industry data showing a build in U.S. crude stockpiles added to worries about oversupply, but hopes for a swift economic recovery in China limited losses.
Brent crude futures fell 10 cents, or 0.2 per cent, to $42.98 a barrel by 0417 GMT.
U.S. West Texas Intermediate (WTI) crude futures dropped 12 cents, or 0.3 per cent, to $40.50 a barrel, holding to the narrow range of the past few weeks.
“The market is mixed as optimism about China’s quick economic rebound is offset by persistent worries that the rising coronavirus cases in the United States and other areas will stall recovery in fuel demand,’’ said Satoru Yoshida, a commodity analyst with Rakuten Securities.
“We expect the WTI to stay in the $38.50-$41.50 range for the next couple of weeks,’’ he added.
U.S. crude oil stockpiles rose last week, against expectations for a draw, although gasoline and distillate inventories fell more than expected, data from industry group, the American Petroleum Institute, showed.
Adding to the pressure, the U.S. Energy Information Administration (EIA) said on Tuesday that U.S. crude oil production is expected to fall by 600,000 barrels per day (bpd) in 2020, a smaller decline than the 670,000 bpd it forecast previously.
However, it also expected global oil demand to recover through the end of 2021.
“The EIA’s forecast of a lower decline in U.S. output was partially cushioned by its outlook for firm demand recovery, which limited losses in oil markets,’’ Hiroyuki Kikukawa, General Manager of research at Nissan Securities, said.
“Still, expectations that the Organisation of the Petroleum Exporting Countries (OPEC) and allies would taper oil output cuts from August and softer U.S. equities added to the pressure,’’ he said.
Abu Dhabi National Oil Co (ADNOC) plans to boost oil exports in August, the first signal that OPEC and its allies, together known as OPEC+, are preparing to ease record oil output cuts next month, three sources familiar with the development, told Reuters.
Key ministers in the OPEC+ grouping are due to hold talks next week.
Meanwhile, the U.S. coronavirus outbreak crossed a grim milestone of over three million confirmed cases on Tuesday as more states reported record numbers of new infections.