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 gained 81 cents, or 2.1%, to $40.62 a barrel. The benchmark dropped more than 5% on Tuesday to fall below $40 a barrel for the first time since June.
U.S. crude CLc1 rose $1.15, or 3.1%, to $37.91 a barrel, having fallen nearly 8% in the previous session.
That lifted the major benchmarks off Tuesday’s levels near three-month lows. Prices fell this week after Saudi Arabia’s state oil company Aramco cut the October official selling prices for its Arab light oil, a sign of softening demand.
“When strong Middle Eastern producers are willing to sell-off in lower prices it is normal that the global market panics and follows suit,” said Paola Rodriguez-Masiu, Rystad Energy’s senior oil markets analyst.
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.
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.