(Bloomberg) -- Oil edged higher amid early signs of recovery in the U.S. energy sector while the Federal Reserve warned about economic risks from the pandemic, signaling a bumpy rebound from virus-led demand destruction.
Futures in New York added 0.8% after dropping 1.9% on Wednesday. U.S. crude stockpiles at the key storage hub of Cushing dropped last week for the first time since February and nationwide inventories posted a surprise decline. However, Fed Reserve Chair Jerome Powell said the threat of a lasting downturn could deepen without additional government spending.
OPEC also presented a bleak assessment of global oil markets for the second quarter, even as some members including Saudi Arabia implement deeper output cuts and pockets of demand emerge in China and India.
Oil has swung between gains and losses this week as the market grapples with a nascent recovery in demand and concerns a resurgence of coronavirus cases could derail an economic rebound. While Saudi Arabia and Russia see signs of consumption improving, OPEC cut its estimate for the amount of crude it will need to supply in the second quarter by about 15% due to the lingering impact of the outbreak.
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Crude stockpiles at Cushing, Oklahoma, the delivery-point for WTI, fell by 3 million barrels last week, the Energy Information Administration reported on Wednesday. Nationwide inventories dropped by 745,000 barrels, compared with a forecast increase of 4 million barrels in a Bloomberg survey. However, refinery crude input was at the lowest level since 2008.
Russia is nearing its target for output cuts under the OPEC+ deal agreed last month, but producers there face a challenge in reining in their activity without permanently damaging their fields. The coalition of producers are set to reduce daily supply by almost 10 million barrels.
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