Oil prices hold ground after sharp retreat on virus fears

MELBOURNE, June 25 (Reuters) - Oil prices inched up in early
trading on Thursday after sliding more than 5% in the previous
session on worries that a rapid rise in COVID-19 cases could
choke a revival in fuel demand, but volumes were thin with China
out on a public holiday.
U.S. West Texas Intermediate (WTI) crude CLc1 futures rose
12 cents, or 0.3%, to $38.13 at 0129 GMT after dropping $2.36 on
Wednesday.
Brent crude LCOc1 futures climbed 5 cents, or 0.1%, to
$40.36, after falling $2.32 on Wednesday. A day earlier, the
benchmark contract hit its highest price since early March, just
before pandemic lockdowns and a Saudi-Russian price war slammed
markets.
Wednesday's selloff came after U.S. government data showed
crude stockpiles rose by 1.4 million barrels, driving
inventories to a record high for a third straight week last
week. EIA/S
However analysts said that was mostly due to a flotilla of
Saudi cargoes booked by U.S. refiners when prices slumped in
March. Those shipments are due to ease soon.
On the positive side, the U.S. data showed a healthy
increase in implied demand for gasoline, said National Australia
Bank's head of commodity research, Lachlan Shaw.
Gasoline supplied, a proxy for demand, jumped by 9% from the
previous week, and U.S. gasoline stocks fell by 1.7 million
barrels, the Energy Information Administration said, a bigger
draw than analysts had expected. However worries about a second wave of COVID-19 cases in
several U.S. states, where lockdowns had eased, and a rapid
spread of infections in South America and South Asia are
expected to keep a lid on fuel demand.
The fear is that even if lockdowns are eased, people will
stay home because of the perceived health risks.
"The latest trends there are not encouraging," Shaw said.
Stephen Innes, market strategist at AxiCorp, said mobility
data from Google showed driving in Texas, Florida and to a
certain extent California was flatlining.
In another reminder of fuel demand woes, Australia's
flagship airline, Qantas Airways, said on Thursday it expected
little revival in international travel until at least July 2021,
as it slashed a fifth of its workforce and grounded 100 planes.
"It highlights the reality that we're talking years before
international aviation recovers -- probably three to four
years," Shaw said.