Oil prices steadied on Wednesday, after four days of declines with investors still wary about prospects for stronger fuel demand as the use of rail, air, and other forms of transport remained constrained amid surging COVID-19 cases worldwide.
U.S. West Intermediate crude (WTI) jumped 19 cents, or 0.29% at $66.73 a barrel.
Brent crude was up 20 cents or 0.29% at $69.29 a barrel.“In the short-term, the oil market may be volatile with frequent pull-backs as crude prices are beginning to struggle as demand in Europe and India faces headwinds,” said Avtar Sandu, senior manager, commodities at Phillip Futures in Singapore.
India, the world’s third-biggest crude importer, also started sales of oil to state-run refiners from its Strategic Petroleum Reserve (SPR), putting in practice a new policy to commercialize federal storage by leasing out space.
A stronger dollar was also hitting commodities across the board, with metals and precious gold in particular as “equally fragile” as oil, ANZ Research said in a note.
Crude is typically priced in dollars so a stronger greenback makes oil more expensive, hitting demand.
In the United States, more supply is set to hit the market if official forecasts prove right.
U.S. shale oil production is expected to rise to 8.1 million barrels per day (bpd) in September, the highest since April 2020, according to the government’s Energy Information Administration’s monthly drilling output report.
Crude and gasoline inventories in the United States are expected to have fallen last week, while distillate stockpiles are likely to have risen for a third straight week, an extended Reuters poll showed.
Based on the average estimates of nine analysts polled by Reuters, crude stocks dropped by around 1.1 million barrels in the week to Aug. 13.