Oil futures finished higher on Thursday, supported by signs of tighter U.S. crude supplies, despite persistent concerns that rising cases of COVID-19 will lead to weaker energy demand.
MarketWatch reported the commodity tallied a third climb in a row, but the gains have been modest and prices still remain lower for the week. “Oil prices need a shot of something,” said Phil Flynn, senior market analyst at The Price Futures Group, in a note.
West Texas Intermediate crude for November delivery edged up by 38 cents, or nearly 1%, to settle at $40.31 a barrel on the New York Mercantile Exchange after tapping a low at $39.12. November Brent crude, the global benchmark, added 17 cents, or 0.4%, to trade at $41.94 a barrel on ICE Futures Europe.
The U.S. Federal Reserve “wants it to be another shot of stimulus and perhaps a shot of a coronavirus vaccine,” he said. “Perhaps it’s another shot of compliance by the OPEC plus cartel, or maybe it just needs to get past September where hurricanes and storms impacted both supply and demand.”
“Lifeless crude prices and frightful refining margins present a faltering demand recovery, especially with COVID cases rising again. But fortunately, OPEC’s supply constraint and a further fall in U.S. supply in 4Q and 2021 will provide the offset,” said Stephen Innes, chief global markets strategist at AxiCorp, in a note.
Oil rose Wednesday after the Energy Information Administration reported that U.S. crude inventories fell for a second straight week, by 1.6 million barrels for the week ended Sept. 18. That was much less than the average forecast from analysts polled by S&P Global Platts for a decline of 4 million barrels, but the American Petroleum Institute on Tuesday had reported an increase of 691,000 barrels.
Also, gasoline inventories fell by a larger-than-expected 4 million barrels, while distillate stocks unexpectedly declined by 3.4 million barrels.