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

NEW YORK: Oil prices held 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 fell 16 cents, or 0.4%, to $41.61 a barrel by 12:32 p.m. EDT (1632 GMT), while US West Texas Intermediate crude slipped 3 cents, or 0.1%, to $39.90.

That puts the premium of Brent over WTI on track for its smallest closing level since late May.

On Wednesday, prices climbed slightly after government data showed US oil inventories fell last week. Crude stocks declined by 1.6 million barrels, gasoline by 4 million barrels, and distillate stockpiles posted a surprise drawdown of 3.4 million barrels.

Still, US fuel demand is subdued as the pandemic limits travel. The four-week average gasoline demand last week was down 9% from a year earlier, government data showed.

"Prices remain vulnerable despite the fact that they have settled as the week has progressed," said Craig Erlam, senior analysts at OANDA, noting "The risks to the outlook remain to the downside due to the rising COVID numbers across Europe."

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.

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.