Oil moved back above $40 a barrel in London, as broader markets rebounded from Tuesday’s selloff.
Futures rose 1.2%, after settling at the lowest level since June 15.
While crude rallied along with other risk assets, it also found technical support, rising sharply above the 100-day moving average after falling a few cents under earlier Wednesday.
Prices, however, remain below Tuesday’s open. A slow demand recovery in Asia, the end of the driving season in the U.S. and the easing of OPEC+ curbs on output are weighing on the market.
The coronavirus pandemic is still raging, and Bank of America Merrill Lynch and the Russian deputy energy minister estimate it could take about three years for oil consumption to fully recover.
“Brent has managed to find support below $40 for a second day with the 100-day moving average attracting some interest,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Overall, however, it is probably the improved risk appetite from rising stocks that has helped an overall challenged short-term fundamental outlook.”
Prices –
Brent for November settlement rose 46 cents to $40.24 a barrel as of 8:41 a.m. in New York
West Texas Intermediate for October delivery added 2.1% to $37.52
See also: The Pandemic’s Second Wave May Already Be Upon the Oil Market
In the latest sign of a more stymied outlook for U.S. oil production and weaker demand, Enterprise Products Partners LP canceled the expansion of its 450,000 barrel a day Midland-to-Echo crude oil pipeline system that connects the Permian Basin with the Gulf Coast.
The Energy Information Administration will give the latest clues about the country’s output in its monthly Short-Term Energy Outlook later on Wednesday.
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