Oil struggles to recover after US gasoline stocks build

LONDON: Oil prices ticked up on Thursday but struggled to recover fully from the previous session’s losses when higher U.S. gasoline inventories signalled a deteriorating demand outlook as coronavirus cases soar.
Brent crude LCOc1 futures were up 54 cents at $42.27 a barrel at 1349 GMT and U.S. West Texas Intermiate (WTI) crude CLc1 futures gained 56 cents to $40.59.
Both contracts shed more than 3% on Wednesday in their steepest daily falls in three weeks.
U.S. gasoline stocks USOILG=ECI rose by 1.9 million barrels in the week to Oct. 16, the Energy Information Administration (EIA) said on Wednesday, compared with expectations for a drop of 1.8 million barrels.
Overall product supplied – a proxy for demand – averaged 18.3 million barrels per day (bpd) in the four weeks to Oct. 16, the EIA said, down 13% from the same period a year earlier.
Record new daily COVID-19 infection numbers in several U.S. states and in Europe, along with further coronavirus lockdowns and China’s crackdown on outbound travel, all bode ill for fuel demand.
Worsening the outlook, hopes that U.S. lawmakers would reach agreement with the White House on an economic stimulus package dimmed late on Wednesday after President Donald Trump accused Democrats of holding up a compromise deal.
“(A deal) might improve the demand tone for a week or two,” said Lachlan Shaw, head of commodity research at National Australia Bank.
Adding to the supply concerns, Libyan oil exports are quickly accelerating into October as loading restarts after the easing of a blockade by eastern forces.
Libyan production has recovered to about 500,000 bpd and the government in Tripoli expects that to double by the end of the year.
Goldman Sachs said it expects average Brent prices rising from $43.90 a barrel this year to $59.40 next year, with WTI from $40.10 to $55.90.