(Bloomberg) -- Oil held gains near $41 a barrel an industry report pointed to a sharper-than-expected drop in American crude stockpiles last week.
Futures in New York were steady after gaining 2.1% Wednesday. U.S. inventories fell by 5.42 million barrels, the American Petroleum Institute reported, according to people familiar with the data. That would be the biggest weekly drop since August if confirmed by government figures due Thursday. The API report also showed declines in gasoline and distillate stockpiles.
Crude managed to push higher even after U.S. Treasury Secretary Steven Mnuchin said getting a fiscal stimulus deal before next month’s election would be difficult, which weighed on American stocks overnight.
Oil market sentiment has improved amid some positive signs from Asia. One Chinese mega-refiner is snapping up barrels of Middle Eastern crude, while processing has been cranked up in India ahead of an expected jump in demand during festivals. The structure of the market is also pointing to strength ahead. The contango in Brent’s prompt timespread has narrowed this month, a bullish signal suggesting concerns over a glut have eased.
The optimism is being tempered, however, by the imposition of more measures to combat a resurgent coronavirus in Europe and a renewed rise in U.S. infections. Against this backdrop, the market remains wary of plans by OPEC+ to raise supply in 2021 in line with its agreement earlier this year.
OPEC and its allies plan to stick to a gradual tapering of production cuts, Russian Energy Minister Alexander Novak said in his column for Energy Policy magazine. Those reductions will leave global markets precariously balanced, the International Energy Agency said Wednesday, warning that the outlook for oil “remains fragile” as the pandemic depresses demand.
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