Oil steadies, Delta outbreaks cloud demand prospects By Reuters

© Reuters. This May 25, 2020 illustration shows 3D printed oil drums and percentage symbols in front of dollar banknotes. REUTERS / Dado Ruvic / Illustration

By Aaron Sheldrick

TOKYO (Reuters) – Oil prices stabilized on Wednesday after four days of decline, with investors still suspicious of the prospect of stronger fuel demand as use of rail, air and other modes of transport amid rising global COVID-19 Cases remained restricted.

After flying around Tuesday close in Asian morning trade, it rose 23 cents, or 0.3%, to $ 69.26 a barrel by 0512 GMT. US oil was up 24 cents, or 0.4%, to $ 66.83 a barrel.

“In the short term, the oil market can be volatile with frequent setbacks as crude oil prices begin to struggle as demand faces headwinds in Europe and India,” said Avtar Sandu, senior manager, commodities at Phillip Futures in Singapore.

India, the world’s third largest crude oil importer, also began selling oil from its Strategic Petroleum Reserve (SPR) to state refineries, putting into practice a new policy of commercializing state deposits through leasing land.

A stronger dollar also hit commodities across the board, with metals and precious gold in particular being “just as fragile” as oil, ANZ Research said in a press release.

Crude oil is usually quoted in dollars, so a stronger greenback makes oil more expensive and affects demand.

In the United States, there will be more supply if the official forecasts prove correct.

U.S. shale oil production is set to rise to 8.1 million barrels per day (bpd) in September, the highest since April 2020, according to the Energy Information Administration’s monthly drill output report.

Crude oil and gasoline inventories are expected to have declined in the United States last week, while distillate inventories are likely to have increased for the third straight week, an expanded Reuters poll found.

Based on the average estimates of nine analysts polled by Reuters, crude oil inventories fell by around 1.1 million barrels for the week ended August 13.

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