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UPDATE 6-Oil prices edge up off 3-month lows; demand concerns persist

Wed, 9th Sep 2020 06:43

* Major benchmarks trading around 3-month lows

* Morgan Stanley raises H2 2021 Brent forecast

* Coming up: API data on U.S. crude stockpiles
(new throughout, updates prices, market activity and comments;
new byline, changes dateline, previous LONDON)

By Stephanie Kelly

NEW YORK, Sept 9 (Reuters) - Oil futures on Wednesday 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 gained 81 cents, or 2.1%, to $40.62 a
barrel by 11:28 a.m. EDT (1528 GMT). The benchmark dropped more
than 5% on Tuesday to fall below $40 a barrel for the first time
since June.

U.S. crude 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.

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.

Investors awaited industry data on U.S. crude stockpiles due
on Wednesday. U.S. crude oil stockpiles were expected to fall
for a seventh straight week, while refined product inventories
also likely dropped last week, a preliminary Reuters poll showed
on Tuesday.
(Reporting by Stephanie Kelly in New York, additional reporting
by Ahmad Ghaddar in London and Aaron Sheldrick in Tokyo; Editing
by Elaine Hardcastle, Louise Heavens, Emelia Sithole-Matarise
and David Gregorio)

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