Oil prices jump on U.S. inventory drop

Oil Prices Finish Higher on Strong Draw

Brent crude's three-month timespread has been more than $1 a barrel in contango - where near-dated contracts are cheaper than later-dated ones - for five sessions.

Oil prices dipped on Thursday as a surge of coronavirus infections around the globe raised fears a rebound in fuel demand would stutter just as major oil producers are set to raise output in August.

US West Texas Intermediate (WTI) crude futures were down 70 cents, or 1.7 per cent, at $40.57 a barrel.

Crude Oil Stocks Change in the US was -10.6 million barrels in the week ending July 24th, the weekly report published by the US Energy Information Administration (EIA) revealed on Wednesday.

Distillates inventories grew by 503,000 barrels, while crude imports fell by 795,000 barrels a day.

However, at the same time United States gasoline and distillate stocks, which include diesel and heating oil, both rose against expectations for inventories to fall - highlighting the patchy nature of the recovery in fuel demand.

"The easing Opec+ supply restrictions combined with the return of some U.S. production may test the resilience of market sentiment in the coming weeks", Stephen Innes, chief global market strategist at AxiCorp said.

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"The gasoline glut provides the poor eye candy in the report, which reinforces the fact this is not your typical USA driving season as the pandemic continues to ravage the US sunbelt".

"Genuine price support comes from the weak dollar, which helps physical oil demand", said Tamas Varga, an analyst at PVM Oil Associates Ltd.

Oil prices rose on Wednesday after a surprise drop in U.S. crude inventories, but demand concerns amid record increases in Covid-19 infections in some USA states capped gains.

Covid-19 continues to surge in the US - with California, Texas and Florida reporting record daily deaths - and is also staging a comeback in Asia.

A record number of new coronavirus infections were reported globally, while in the United States, deaths from the novel coronavirus were approaching 150,000, the highest level in the world and rising by 10,000 in 11 days, according to a Reuters tally.

The group, known as OPEC+, collectively plans to increase production from Saturday, adding about 1.5 million barrels per day to global supply, after slashing output in the wake of the pandemic.

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