Early on Thursday, WTI crude oil prices are trading flat and holding gains from the previous session as concerns about supply being affected by Hurricane Sally offset worries about weakness in oil demand in the wake of the coronavirus crisis. At the time of writing, WTI crude oil is trading at around $39.66 per barrel.

WTI crude oil came under pressure on Wednesday following the release of the EIA report which revealed a greater than expected build in US distillate inventories. According to the EIA, distillate stockpiles in the US increased by 3.5 million barrels over the past week, heightening fears that oil demand remains weak even after lockdown restrictions have been lifted.

This was the highest jump in distillate stockpiles seen since 1991, while margins for producing distillate among US refiners have hit a 10-year low. Given the low prices, refiners are unlikely to increase the supply of distillate products and reflects weak demand for several crude oil based products.

Meanwhile, oil companies are gradually working towards restarting production off the Gulf of Mexico after Hurricane Sally. The tropical storm has taken down up to 500k bpd worth of oil output in the region, lending song support to crude oil prices temporarily amid concerns about supply disruption.

Later today, crude oil could see some moves as OPEC and allies get ready to meet and review prevailing conditions in oil markets. In its meeting in July, OPEC+ had committed to decreasing oil supply by 7.7 million bpd from August until December to balance supply against weak demand but further cuts seem unlikely in today’s meeting.