Crude steady as rising European Covid-19 cases offset US oil stock draw

[NEW YORK] Oil prices were steady on Thursday as a new wave of coronavirus cases in Europe led several countries to reimpose travel restrictions, offsetting a bullish drop in US crude and fuel inventories.

Brent futures settled 17 cents, or 0.4 per cent, higher at US$41.94 a barrel, while US West Texas Intermediate (WTI) crude gained 38 cents, or 1.0 per cent, to end at US$40.31.

That cut Brent's premium over WTI to its smallest closing level since late May when WTI settled higher than Brent on one day.

"Oil prices (are) stable for now but downside pressure remains ... due to rising Covid-19 numbers across Europe," said Craig Erlam, senior analysts at OANDA.

Britain, Germany and France imposed new restrictions to stem the coronavirus spread - all factors affecting fuel demand.

Prices were also capped by data showing the number of Americans filing new claims for unemployment benefits unexpectedly increased last week, supporting views the economic recovery from the Covid-19 pandemic was running out of steam amid diminishing government funding.

"Oil prices are holding up pretty well despite the lack of additional US government stimulus," Phil Flynn, senior analyst at Price Futures Group in Chicago said, noting the market received support from this week's US oil inventory data and a rise in the stock market.

US crude, petrol and distillate inventories all fell last week, according to government data on Wednesday.

US fuel demand, however, remains subdued as the pandemic limits travel. The four-week average petrol demand last week was down 9 per cent from a year earlier, government data showed.

Looking forward, a senior executive at US oil producer ConocoPhillips said global demand will return to 100 million barrels per day and grow from there.

On the supply side, the market remains wary of a resumption of exports from Libya, although it is unclear how quickly it can ramp up volumes.

An oil tanker was loading a crude cargo on Thursday from one of three recently reopened Libyan terminals, with more loadings expected over the coming days.

REUTERS