Oil prices swung between small gains and losses Thursday, pausing a recent rebound with traders weighing lower supply against uncertainty about the return of fuel demand.
U.S. crude futures for delivery in July were recently down 0.1% at $37.92 a barrel on the New York Mercantile Exchange. Prices have hovered just below $40 recently but have staged a weekslong recovery since briefly dropping below $0 for the first time ever in late April due to a lack of available storage. They started the year above $60.
Drivers returning to the roads, a pickup in Chinese economic activity and record supply cuts by the Organization of the Petroleum Exporting Countries and allies like Russia have driven the recovery. Tumbling output from U.S. shale producers has also pushed some investors to wager on long-term supply shortages.
Government data released Wednesday showed U.S. crude supply fell to 10.5 million barrels a day last week, down from a record above 13 million barrels a day hit earlier in the year.
Still, total petroleum products supplied by energy companies, a proxy for fuel demand, fell slightly last week, pausing a recent surge that had buoyed oil prices. As a result, U.S. crude stockpiles rose slightly and hit a new all-time high in data going back to 1982.
Crude-oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Okla., April 21.
Photo: dronebase dronebase/ReutersMany investors are also concerned that a fresh spike in global coronavirus cases would stall the rebound in oil demand, creating a tug of war between supply cuts and demand anxiety.
“A difficult trading period would appear to lie ahead especially given much uncertainty related to the coronavirus,” Jim Ritterbusch, president of energy advisory firm Ritterbusch & Associates, said in a note.
Brent crude for delivery in August, the global gauge of oil prices, added 0.2% to $40.79 a barrel on the Intercontinental Exchange Thursday.
Investors are closely watching supply in the U.S. and globally to see if producers start bringing back output, but so far, most large suppliers are sticking with curtailments to boost depressed energy markets.
As a result, many analysts expect global inventories to begin falling, a condition that typically lifts crude prices.
Traders were also monitoring moves in global stocks because oil and equities have tended to move similarly recently based on investors’ appetite for riskier assets and news about the coronavirus. Global stocks edged lower Thursday.
Elsewhere in commodities, natural-gas futures fell 1% to $1.622 a million British thermal units ahead of weekly inventory data. Tumbling demand for the power-generation fuel has sent prices down more than 25% for the year and near multiyear lows.
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Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
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