Oil prices continue to oscillate in a familiar range on Thursday. Brent struggles to regain the $44 figure while staying above the $42 level since mid-July. Bullish data from the EIA sent prices higher yesterday but the report was not enough to give a more robust boost to the market. According to the official report, crude oil inventories dropped 10.6 million barrels last week –  the largest so far this year. However, an unexpected rise in gasoline stockpiles tempered the optimism, fueling concerns over the outlook for a recovery in energy demand amid the ongoing coronavirus pandemic. 

In a wider picture, the bullish potential in the oil market remains capped by several risk factors. The US-China diplomatic tensions continue to unnerve investors, dashing hoped for the economic recovery from the current crisis. Also, the latest signs of rising activity in the US shale fields add to a mostly negative tone in the market. Flattening of oil demand recovery amid rising coronavirus cases play against oil bulls as well. 

During the last several weeks, oil prices remain stuck in a relatively tight range, struggling to extend the recovery from April lows which could be a sign of dissipating optimism surrounding economic re-openings. In other words, the path of least resistance for Brent is still to the downside at least in the near term.

After a mild recovery yesterday, Brent crude came under the renewed negative pressure today. As such, the futures failed to confirm a break above the key $44 handle once again. On the other hand, the prices stay above $43, suggesting the current consolidation could continue for some time. 

It looks like the market needs some strong catalysts to exit the boring range in either direction. Considering the prevailing risk-off tone in the global financial markets, there is a possibility that Brent will target lower levels after a period of consolidation. On the downside, the key support arrives at $40. As long as the prices stay above this level, bearish risks are limited. 

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