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(Bloomberg) -- Oil recovered from the steepest one-day loss in almost two weeks as equities advanced, though further gains may be limited by a resurgence in coronavirus cases and new lockdown measures.Crude futures rose 0.7% in both London and New York as equities staged a modest comeback from Monday’s broad selloff. Although the global oil market will move into deficit in the fourth quarter on the back of OPEC+ supply cuts, prices will likely remain range-bound until there’s a recovery in distillate demand, including jet fuel, according to Bank of America Merrill Lynch.Oil held steady in after-market trading following the American Petroleum Institute report that U.S. crude stockpiles rose last week by 691,000 barrels. The API figures also showed gasoline and distillate supplies declined, according to people familiar.“Global demand looks pretty soft, it looks like we’re going to get another wave of the virus, and we’re in a seasonally weak time of the year,” said Bill O’Grady, executive vice president at Confluence Investment Management in St. Louis.The market is assessing fresh risk from the prospect of a second wave of Covid-19, as governments mull tightening restrictions that have crippled demand. Federal Reserve Chair Jerome Powell said the recovery in the American economy remains highly uncertain and will need further support. While some expect the supply picture to improve heading into the end of the year, the persistent demand slump is keeping a lid on any substantial rally.“The challenge facing oil producers is that winter gasoline is simply too easy to make and global distillate inventories remain completely dislocated,” analysts at Bank of America Merrill Lynch said in a report. “The obvious choice for refiners now is to cut crude runs and wait out the pandemic.”The so-called crack for combined gasoline and diesel against West Texas Intermediate futures -- a rough profit gauge for processing a barrel of crude -- fell 8.8% to $8.35 a barrel, the lowest since August. Refineries typically need the spread to be more than $10 a barrel to make a profit processing crude oil.Meanwhile, Libya is signaling that it will return some supply back to the market. Libya has lifted force majeure restrictions at its Zueitina export terminal, according to the state National Oil Corp. The company is in the process of evaluating the security situation at the nation’s other oil ports.On the U.S. Gulf Coast, Tropical Depression Beta has flooded Houston, but is weakening as it heads toward Louisiana. The storm isn’t expected to affect operations at refineries, and interruptions to offshore rigs aren’t likely to be long-lasting either. Some Texas ports are starting to reopen, with the U.S. Coast Guard allowing traffic to resume at Corpus Christi and reopening the Houston and Galveston ports with restrictions.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.