Oil surged around 2% on Wednesday after industry data showed crude inventories dropped sharply. However, trade fluctuated as the outcome of the US presidential election remained uncertain.
West Texas Intermediate(WTI) was up 80 cents, or 2.1%, at $38.46 a barrel by 0436 GMT, after trading in a nearly $1 range. Brent crude was up 80 cents, or 2%, at $40.51, after trading between $39.85 and $40.70.
Oil prices fell more than 10% last week as global coronavirus cases increased and further restrictions on human mobility hit demand expectations. WTI oil nearly compensated for these losses, with three days of gain this week ahead of the election.
Investors who have active positions in the market with electoral uncertainty are trading very quickly, as required by the rule of time. Prices for the coming hours and days may rather be more financial flow-oriented than fundamentally driven.
Regarding data released on Tuesday, U.S. crude inventories fell sharply last week, while gasoline stocks soared. According to the statement, crude oil stocks fell 8 million barrels last week to 487 million barrels. However, this contradicts analyst surveys’ expectations of an 890,000-bbl increase.
Further possible lockdowns could limit oil price increases as Italy, Norway and Hungary tighten their COVID-19 restrictions, following the UK, France and other countries. Although it is stated that the demand for oil and its products in Asia is returning, there are increasing demand uncertainties in Europe.
OPEC member Algeria, like Russia, supports sustaining the oil production cuts , which supports prices, postponing the planned increase from January.
By the way, sources say OPEC and Russia are considering further production cuts next year to bolster prices.