By Aaron Sheldrick

TOKYO (Reuters) -Oil prices steadied on Wednesday after four days of declines with investors still worried about the outlook for fuel demand as the use of rail, air and other forms of transport remained constrained amid surging COVID-19 cases worldwide.

After flitting around Tuesday’s close in Asian morning trade, was up 56 cents or 0.8% at $69.59 a barrel by 0649 GMT. U.S. oil gained 50 cents or 0.8% to $67.09 a barrel.

“In the short-term, the oil market may be volatile with frequent pull-backs as crude prices are beginning to struggle as demand in Europe and India faces headwinds,” said Avtar Sandu, senior manager, commodities at Phillip Futures in Singapore.

India, the world’s third-biggest crude importer, also started sales of oil to state-run refiners from its Strategic Petroleum Reserve (SPR), putting in practice a new policy to commercialize federal storage by leasing out space.

A stronger dollar was also hitting commodities across the board, with metals and precious gold in particular as “equally fragile” as oil, ANZ Research said in a note.

Crude is typically priced in dollars so a stronger greenback makes oil more expensive, hitting demand.

In the United States, more supply is set to hit the market if official forecasts prove right.

U.S. shale oil production is expected to rise to 8.1 million barrels per day (bpd) in September, the highest since April 2020, according to the government’s Energy Information Administration’s monthly drilling output report.

oil and gasoline inventories fell last week, according to two market sources, citing American Petroleum Institute figures on Tuesday, while distillate stocks rose.