LONDON – Oil futures clawed back some of the losses they sustained in the previous session, but a rebound in COVID-19 cases in some countries undermined hopes for a steady recovery in global demand.
Brent crude LCOc1 was up 44 cents, or 1.1%, at $40.22 a barrel by 0752 GMT after dropping more than 5% on Tuesday to fall below $40 a barrel for the first time since June.
U.S. crude CLc1 was up 50 cents, or 1.4%, at $37.26 a barrel, having fallen nearly 8% in the previous session.
Both major oil benchmarks are trading close to three-month lows.
The global health crisis continues to flare with coronavirus cases rising in India, Great Britain, Spain and several parts of the United States.
The outbreaks are threatening to slow a global economic recovery and reduce demand for fuels from aviation gas to diesel.
“Short-term oil market fundamentals look soft: the demand recovery is fragile, inventories and spare capacity are high, and refining margins are low,” Morgan Stanley said.
Yet, the bank raised its Brent price forecast slightly higher to $50 a barrel for the second half of 2021 with the dollar weakening and rising inflation expectations, it said.
Record supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+ have helped support prices, but with grim economic figures being reported almost daily, the outlook for demand for oil remains bleak.
China’s factory gate prices fell for a seventh straight month in August although at the slowest annual pace since March, suggesting industries in the world’s second-biggest economy continued their recovery from the coronavirus-induced downturn.