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Oil Prices Try to Gain Traction Higher Ahead of Storage Data

Oil futures attempted to gain ground Wednesday, with crude trying to find some support after data from an industry trade group showed a fall in fuel inventories. The moves for crude comes as Wall Street looks to extend a bounce, underlining appetite for assets viewed as risky, including commodities like oil.

West Texas Intermediate crude for November delivery had been trading higher, but was now off 10 cents, or 0.2%, at $39.72 a barrel on the New York Mercantile Exchange. The global benchmark, November Brent crude was up 3 cents, or 0.1%, at $41.75 a barrel on ICE Futures Europe.

Global equities were on the rise, with U.S. stock-index futures pointing to gains a day after the S&P 500  snapped a four-day losing streak. But analysts said the continued rise in COVID-19 cases, which has seen the return of some increased restrictions on activity in the U.K. and other parts of Europe, could put pressure on crude and other assets perceived as risky.

“The rebound in risk appetite today is lifting oil prices a little but it’s already faces stiff resistance. A rally in oil may feel like swimming against the tide in the near-term, with rising COVID cases and restrictions likely to weigh on economic activity and therefore demand,” said Craig Erlam, senior market analyst at OANDA, in a note.

Traders are also focused on supply data. The American Petroleum Institute reported late Tuesday that U.S. crude supplies rose by 691,000 barrels for the week ended Sept. 18, according to sources. The API data also reportedly showed gasoline stockpiles dropped by 7.7 million barrels, while distillate inventories declined by 2.1 million barrels. Crude stocks at the Cushing, Okla., storage hub, meanwhile, inched up by 298,000 barrels for the week, sources said.

More closely followed data from the Energy Information Administration will be released Wednesday morning. Analysts surveyed by S&P Global Platts look for crude inventories to fall by 4 million barrels. They also forecast a supply drop of 1.9 million barrels for gasoline and an inventory increase of 1.2 million barrels in distillates.

Meanwhile, the impending return of Libyan crude to the market is also seen weighing on crude prices, analysts said. Libya’s National Oil Company continues to announce progress toward a resumption of supply, “with the latest plan seeing 260,000 barrels a day of supply already next week, around 150,000 b/d higher than what has been typical over recent months,” wrote analysts at JBC Energy, a Vienna-based consulting firm, in a note.

The rise in supply comes outside of the agreement by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, to curb output by 7.7 million barrels a day “and adds pressure to a market which is globally still trying to assess the impact of the latest stagnation in the demand recovery,” they said.

Source: Marketwatch