CORRECTED-UPDATE 2-Oil prices rise as U.S. crude inventories show large drop

(Corrects to read Tuesday, paragraph 2)
By Aaron Sheldrick
TOKYO, Aug 5 (Reuters) - Oil prices rose on Wednesday after
inventory data showed a big drop in U.S. crude stocks although
gains were capped by concerns over fuel demand with mounting
global COVID-19 cases.
Brent crude LCOc1 was up by 31 cents, or 0.7%, at $44.74 a
barrel by 0713 GMT. The contract rose 0.6% on Tuesday to its
highest close since March 6.
West Texas Intermediate CLc1 oil was up by 26 cents, or
0.6%, at $41.96 a barrel. The contract ended Tuesday trading
1.7% higher, its highest close since late July.
Crude inventories fell 8.6 million barrels in the week to
Aug. 1 to 520 million barrels, compared with analysts'
expectations for a drop of 3 million barrels, according to data
from the American Petroleum Institute, an industry organization.
API/S
Official figures from the U.S. Energy Information
Administration are due out later on Wednesday.
"A much larger fall will all but confirm that U.S. oil
production has fallen materially, by possibly millions of
barrels a day," said Jeffrey Halley, senior market analyst at
OANDA.
"That could be enough to overcome COVID-19 slowdown fears,
and force oil prices higher, and out of their one-month summer
doldrums," he said.
But, coronavirus cases continue to rise globally. In the
United States, deaths are at more than a 1,000 a day, while
dozens of states have had to pause or scale back plans to reopen
their economies.
Helping support sentiment were signs that talks between
Democrats in Congress and the White House on a new package of
coronavirus relief started moving in the right direction,
although the two sides remain far apart. U.S. factory data this week also showed an improvement in
orders, which some analysts saw as offering relief to concerns
about risks to any recovery. Japan' services sector contracted for a sixth consecutive
month in July, data showed on Wednesday, suggesting activity in
the world's third-biggest economy and fourth-biggest oil
importer remained under pressure from the health crisis.
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CHART: U.S. oil may retest resistance at $42.08 Brent oil may retreat to $43.81 before rising
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