Oil prices were broadly stable on Thursday as Brent erased losses in early European trading ahead of a meeting of OPEC members and their allies against the backdrop of demand concerns over new coronavirus cases in China and elsewhere.
Brent crude futures were up 2 cents at $40.73 a barrel at 0725 GMT. US West Texas Intermediate (WTI) crude futures dropped 14 cents to $37.82 a barrel.
Both benchmarks were down about 2% earlier in the session.
“The market continues to balance re-opening optimism with unknowns around the economic uncertainties from a secondary outbreak of the virus,” said Stephen Innes, market strategist at AxiTrader.
Worries about fuel demand rose after a surge in coronavirus cases led Beijing to cancel flights and shut schools and several US states, including Texas, Florida and California, reported sharp increases in new cases.
A rise in US crude stockpiles to a record high for a second week in a row weighed on sentiment, but US government data showed lower inventories of gasoline and distillates, which includes diesel and heating oil, indicating higher demand.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, are expected to hold an online meeting later on Thursday to discuss the future of a record 9.7 million barrels per day output cut.
OPEC+ compliance with crude production cut commitments in May was 87%, two OPEC+ sources said on Wednesday.
Iraq and Kazakhstan are expected to present their plans for production cuts and compensation for overproduction to a meeting of the OPEC+ ministerial committee, known as the JMMC, on Thursday, one OPEC+ source said.
OPEC warned in a monthly report the market would remain in surplus in the second half of 2020 even as demand improves, as it now expects supply from outside the group to be about 300,000 barrels per day higher than earlier thought.