UPDATE 9-Oil edges higher after U.S. crude, fuel stockpiles draw down

* U.S. oil inventories fall across the board -EIA
* U.S. business activity dips in September -IHS Markit
* First tanker to load crude at Libya's Hariga port since
January

(Updates with settlement prices; adds commentary)
By Stephanie Kelly
NEW YORK, Sept 23 (Reuters) - Oil prices edged higher on
Wednesday, supported by U.S. government data that showed crude
and fuel inventories dropped last week, though concerns about
the ongoing coronavirus pandemic capped gains.
Brent crude LCOc1 rose 5 cents to settle at $41.77 a
barrel. U.S. West Texas Intermediate crude CLc1 gained 13
cents to settle at $39.93 a barrel.
U.S. crude, gasoline and distillate inventories all fell
last week, Energy Information Administration data showed.
Crude inventories USOILC=ECI fell by 1.6 million barrels, less
than forecast; gasoline stocks USOILG=ECI dropped more than
expected, sliding by 4 million barrels; while distillate
stockpiles USOILD=ECI posted a surprise drawdown of 3.4
million barrels. "The big surprise was the distillates were well below
average," said Phil Flynn, senior analyst at Price Futures Group
in Chicago.
But rising COVID-19 infections in countries including India,
France and Spain and new restrictions on businesses in Britain
have renewed worries about demand, just as more supply may come
from Libya. In the United States, the death toll has passed
200,000.
U.S. business activity nudged down in September, suggesting
a loss of momentum in the economy as the third quarter draws to
a close and the pandemic lingers. Meanwhile, China's diesel exports in August doubled the
levels of July to 1.09 million tonnes, customs data showed on
Wednesday, as refiners shipped fuel overseas despite poor export
margins to reduce brimming domestic oil product inventories.
Oil had collapsed as the pandemic decimated demand, with
Brent falling below $16 a barrel, a 21-year low, in April. A
record output cut by the Organization of the Petroleum Exporting
Countries and allies, known as OPEC+, has helped revive prices.
OPEC faces a new challenge as Libya, an OPEC member that is
exempt from the supply cut, is aiming to boost supply after an
easing of the country's conflict. An oil tanker is expected to
load crude at Libya's Marsa el-Hariga terminal this week, the
first since January. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
CHART: U.S. oil may break support at $38.65 Brent oil may break support at $41.07 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>