(Bloomberg) -- Oil opened little changed in Asia, with an industry report giving mixed signals on the U.S. supply picture, as concerns over the risk of a resurgence of coronavirus held the market under $40 a barrel.
November futures in New York eased 0.2%, after rising 0.7% on Tuesday. The American Petroleum Institute reported crude stockpiles increased by nearly 700,000 barrels last week, according to people familiar, although gasoline and distillate supplies declined. A recovery in U.S. equities had earlier buoyed the market, with stocks rebounding from heavy losses on Monday.
Although the global oil market will move into deficit in the fourth quarter on the back of OPEC+ supply cuts, prices will likely remain rangebound until there’s a recovery in distillate demand, including jet fuel, according to Bank of America Merrill Lynch (NYSE:BAC).
U.S. crude remains below $40 a barrel, with the market assessing fresh risk from the prospect of a second wave of Covid-19 as governments mull tightening restrictions that have crippled demand. Federal Reserve Chairman Jerome Powell said the recovery in the American economy remains highly uncertain and will need further support. While some expect the supply picture to improve heading into the end of the year, the persistent demand slump is keeping a lid on any substantial rally.
The so-called crack for combined gasoline and diesel against West Texas Intermediate futures -- a rough profit gauge for processing a barrel of crude -- fell 8.8% on Tuesday to $8.35 a barrel, the lowest since August. Refineries typically need the spread to be more that $10 a barrel to make a profit processing crude oil.
Meanwhile, Libya is signaling that it will return some supply back to the market. Libya has lifted force majeure restrictions at its Zueitina export terminal, according to the state National Oil Corp. The company is in the process of evaluating the security situation at the nation’s other oil ports.
On the U.S. Gulf Coast, Tropical Depression Beta has flooded Houston, but is weakening as it heads toward Louisiana. The storm isn’t expected to cause many issues for onshore refineries, and interruptions to offshore rigs aren’t likely to be long-lasting either. Some Texas ports are starting to reopen, with the U.S. Coast Guard allowing traffic to resume at Corpus Christi and reopening the Houston and Galveston ports with restrictions.
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