Oil prices gain on sharp US crude inventory drop

Oil prices edged up on Wednesday after a steep drop in US crude inventories, but another record day for COVID-19 cases worldwide kept gains in check.Brent crude futures gained 35 cents to $43.57 a barrel by 10:57 a.m. EDT (1457 GMT). US West Texas Intermediate crude futures were up 18 cents to $41.22.

US crude oil inventories fell by 10.6 million barrels last week to 526 million barrels, the Energy Information Administration said, in their largest drawdown since December.Net US crude imports fell 1 million barrels per day to 1.9 million bpd, the EIA said.

The drawdown was likely a result of supply cuts by the Organization of the Petroleum Exporting Countries and its allies, which were agreed-upon in April, finally being realized in fewer shipments.

“There’s an assumption those tankers pretty much let go of all their oil and so the expectation is that the OPEC cuts are going to lead to bigger draws in the United States,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

A record number of new coronavirus infections were reported globally, while in the United States, deaths from the novel coronavirus were approaching 150,000, the highest level in the world and rising by 10,000 in 11 days, according to a Reuters tally.

“The virus is spreading like wildfire across the Americas while Europe and Asia are displaying worrying signs of a second surge in cases,” said Stephen Brennock of oil brokerage PVM.Six US states reported one-day records for coronavirus deaths on Tuesday and cases in Texas passed the 400,000 mark.

Attempts to provide relief amid the outbreak were in disarray after Republicans in the United States on Tuesday disagreed over their own plan for providing $1 trillion in new coronavirus aid.Indian refiners are cutting crude processing and shutting units for maintenance as fuel demand falters, officials at the companies said.