Oil edged lower toward $40 a barrel before U.S. government data that’s forecast to show gasoline stockpiles increased, while rising virus infections raised concern stricter controls will be extended.
U.S. gasoline supplies expanded by 1 million barrels last week, according to a Bloomberg survey, while nationwide crude stockpiles are projected to have fallen for a second week. Official data is due Wednesday with industry figures expected later Tuesday. Meanwhile, rising coronavirus cases have forced major fuel-consuming states including California, Florida and Texas to reimpose measures such as shutting bars and banning indoor dining.
Oil’s recovery from its plunge below zero in April appears to have hit a wall with surging infections across major economies raising doubts about a swift demand rebound. Unprecedented supply cuts by OPEC and its allies that have supported prices so far are set to wind down next month and producers are yet to decide on whether to extend the curbs.
“Oil is stuck in a no man’s land right now,” said Jeffrey Halley, a senior market analyst for Asia Pacific at Oanda. “Positive exuberance about the reopening of economies is tempered by the re-imposition of partial lockdowns as coronavirus cases flare up across the world.”
U.S. gasoline stockpiles rose for a second week, according to the survey, which would see inventories at the highest level in a month. Supplies of distillates, a category that includes diesel, increased by 500,000 barrels, while crude stocks fell by 3 million barrels.
Meanwhile, the pace of new infections from Tokyo to Iran and Australia is raising concerns about a fresh virus wave, while U.S. cases approached the 3 million mark. Gasoline consumption in the U.S. during the Independence Day holiday — usually a high point for demand — was more than 22% below last year’s levels, according to GasBuddy.