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Oil prices have inched higher, but gains were capped due to an unexpected increase in the US crude oil reserves as the Covid-19 outbreak hit fuel demand.
Brent crude futures increased by $0.02 at $44.31 a barrel, while West Texas Intermediate (WTI) crude futures were up by $0.06 at $41.96 a barrel, Reuters reported.
According to data released by the Energy Information Administration (EIA), the US crude and distillate stockpiles have witnessed a surprise increase. This is due to a surge in Covid-19 cases in the US, which has hit consumption in the country.
Crude inventories increased by about 4.9 million barrels to 536.6 million barrels in the week ending 17 July.
ANZ was quoted by the news agency as stating: “Normally inventories of fuel would be heavily drawn upon, but the surge in Covid-19 case numbers has stymied the recovery.”
On 21 July, US reported over 1,000 deaths from Covid-19, according to a Reuters tally.
US President Donald Trump said that the pandemic would ‘probably worsen’ before it gets to a better state.
Furthermore, a new dispute between the US and China has increased pressure on oil prices.
Meanwhile, economic data with respect to factory activity in Japan decreased for a 15th consecutive month in July. This indicated that lower economic activity in the country due to the Covid-19 pandemic is expected to extend into the third quarter as well.
However, the energy market is probably to take direction from consumer confidence data, which is expected to be released by Europe.