Oil held its decline near $39 a barrel in New York, heading for the first monthly loss since April, as the world’s biggest trading houses signaled a meaningful recovery in demand is some way off.
Futures dipped with global equities after an acrimonious U.S. presidential debate. It may take oil consumption about 18 months to rebound from its virus-driven collapse, according to the head of Mercuria Energy Group, while Gunvor Group Ltd. and hedge-fund manager Pierre Andurand predict a recovery may be closer to two years.
Meanwhile, the American Petroleum Institute reported stockpiles in the U.S. hub of Cushing and gasoline inventories increased last week, while nationwide crude supplies fell. Official government data are due later on Wednesday.
Oil slumped on Tuesday as a surge in coronavirus cases across major economies stoked demand concerns.
The U.S. benchmark crude also ran into technical weakness, sliding below its 100-day moving average for the first time since June.
On the supply side, the market faces rising output from Libya and the rest of OPEC+, with Russia the latest member likely to exceed its quota.
“Traders see oil demand as fragile,” said Paola Rodriguez-Masiu, senior oil-market analyst at Rystad Energy. “We may see some production needing to be sent to inventories in 2020’s last quarter.”
West Texas Intermediate for November delivery fell 0.2% to $39.23 a barrel as of 8:48 a.m. in New YorkFutures are down more than 8% this month
Brent for November settlement, which expires Wednesday, retreated 1.1% to $40.57
Total U.S. crude stockpiles dropped by 831,000 barrels last week, while inventories at the storage hub of Cushing expanded by 1.61 million barrels, according to the API.
Gasoline supplies rose by 1.62 million barrels, which would be the first increase in eight weeks if confirmed by the Energy Information Administration on Wednesday.