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UPDATE 6-Brent pares losses, U.S. crude up on stimulus hopes

Wed, 30th Sep 2020 05:13

(Updates with settlement numbers)

By Jessica Resnick-Ault

NEW YORK, Sept 30 (Reuters) - Global benchmark Brent crude
pared losses Wednesday and the U.S. crude price rose on hopes
that a U.S. economic stimulus deal would support the market,
even as concerns about the coronavirus pandemic continued to
loom over demand forecasts.

U.S. House of Representatives Speaker Nancy Pelosi and
Treasury Secretary Steven Mnuchin both expressed hope for a
breakthrough on coronavirus relief, as the House stood poised to
vote on a new $2.2 trillion Democratic coronavirus bill.

With pressure mounting ahead of the Nov. 3 election, Mnuchin
said he thought he and Pelosi could "reach a reasonable
compromise" and would know in the next day or two whether they
had an "overall understanding."

"The race is on to a stimulus bill," said Bob Yawger,
director of energy futures at Mizuho in New York.

"It's good for all industries, and especially for oil,
because it is a demand indicator for crude demand," Yawger said.

While Yawger remains pessimistic about a deal coming to
fruition, he said it is lending temporary strength to the
market.

Progress on the stimulus brought Brent crude for
November delivery up from its session low of $40.30 a barrel. It
ended the session down 8 cents at $40.95 a barrel. West Texas
Intermediate rose 93 cents, or 2.4% to $40.22 a barrel.

The November Brent contract expires on Wednesday, to be
replaced by the December contract, which settled up 74 cents at
$42.30 a barrel.

Also supporting prices, U.S. weekly crude inventory data
showed stockpiles fell by 2 million barrels in the week to Sept.
25, a deeper draw than analysts had expected.

Exports rose while imports fell, helping facilitate the
drawdown. Net U.S. crude imports fell last week by
536,000 barrels per day, EIA said, to 1.6 million bpd.

The benchmarks fell more than 3% on Tuesday as global
COVID-19 cases passed 1 million, having doubled in three months.
. A Reuters monthly oil poll showed prices would
have little upside this year .

"The increasing number of COVID-19 cases continues to raise
alarm bells on energy demand," said Avtar Sandu, senior
commodities manager at Phillip Futures.

CEOs of the world's biggest trading companies are
forecasting a weak recovery for oil demand and little movement
in prices, potentially for years.

Marathon Petroleum Corp, the largest oil refiner in
the United States, started imposing job cuts on Tuesday,
according to people familiar with the matter.

Royal Dutch Shell also said it would cut up to
9,000 jobs.

To counter the fall in demand, the Organization of the
Petroleum Exporting Countries is unlikely to increase oil
production as planned from January next year, top oil traders
said on Tuesday.

(Reporting by Jessica Resnick-Ault; additional reporting by
Dmitry Zhdannikov and Aaron Sheldrick; Editing by Will Dunham,
David Gregorio, Elaine Hardcastle and Emelia Sithole-Matarise)

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