NEW YORK: Oil futures on Wednesday clawed back some of the losses they sustained in the previous session, but a rebound in Covid-19 cases in some countries undermined hopes for a steady recovery in global demand.
Brent crude rose $1.01, or 2.5 per cent, to settle at $40.79 a barrel. The benchmark dropped more than 5 per cent on Tuesday to fall below $40 for the first time since June.
US crude rose $1.29, or 3.5 per cent to settle at $38.05 a barrel, having fallen nearly 8 per cent in the previous session.
Prices fell this week after Saudi Aramco cut the October official selling prices for its Arab Light oil, a sign of softening demand.
The global health crisis continues to flare with coronavirus cases rising in India, Britain, Spain and several parts of the US. The outbreaks are threatening to slow a global economic recovery and reduce demand for fuels from aviation gas to diesel.
Supply cuts
Record supply cuts by the Organization of Petroleum Exporting Countries and allies, known as OPEC+, have helped support prices, but with grim economic figures being reported almost daily, the outlook for demand for oil remains bleak.
The US Energy Information Administration on Wednesday cut its 2020 world oil demand growth forecast by 210,000 barrels per day (bpd) to 8.32 million bpd.
In the US, crude inventories rose three million barrels last week to 504.1 million barrels, industry data from the American Petroleum Institute showed late Wednesday. Analysts had expected a draw of 1.3 million barrels.
US crude oil production is expected to fall 870,000 bpd to 11.38 million bpd this year, a less steep decline than previously forecast, the US government said in its latest monthly outlook. Further production cuts are expected in 2021, according to the report.