Oil gains as U.S. inventories grow less than feared while coronavirus slashes demand

TOKYO, May 7 (Reuters) - Oil prices rose on Thursday after
U.S. inventories swelled less than expected, but market watchers
predicted further gains could be capped by the ongoing glut in
crude supplies as the coronavirus pandemic crushes fuel demand.
Brent crude LCOc1 was up by 12 cents, or 0.4%, to $29.84 a
barrel 0044 GMT, after falling earlier in the Asian session and
dropping 4% on Wednesday.
U.S. oil CLc1 gained 19 cents, or 0.8%, to 24.18 a barrel,
after declining more than 2% in the previous session.
"The latest report (on U.S. inventories) added to tentative
evidence that – after a catastrophic few weeks – the pressure on
the U.S. oil market is beginning to lessen," Capital Economics
said in a note. "That said, we wouldn't rule out more turbulence
in the coming weeks."
While prices have risen sharply since late April as some
countries have started easing lockdowns put in place to combat
the worst pandemic in a century, oil continues to be pumped into
storage, leaving a massive mismatch between demand and supply.
U.S. crude inventories USOILC=ECI were up for a 15th
straight week last week, rising by 4.6 million barrels, the
Energy Information Administration said on Wednesday. EIA/S
That was less than analysts had forecast in a Reuters poll,
which suggested a 7.8 million-barrel rise, but the gain
highlighted once again how much supply is being stored.
Distillate inventories also rose sharply.
Gasoline stocks, however, fell for a second week as some
U.S. states eased lockdowns that had sharply hit traffic.
Meanwhile Iraq, OPEC's second-largest producer after Saudi
Arabia, has not yet informed customers of impending restrictions
on its oil exports, suggesting it is struggling to fully comply
with a deal between the Organization of the Petroleum Exporting
Countries (OPEC) and other producers like Russia to cut output
by a record amount. OPEC and allied producers - a grouping known as OPEC+ -
agreed to cut production from May 1 by around 10 million barrels
to stabilise prices amid the plunge in demand in economies
ravaged by the coronavirus outbreak.