UPDATE 6-Oil struggles to recover after U.S. gasoline stocks build

* Demand outlook dampened by rising U.S. inventories
* Resurgent infections expected to hit fuel demand
* Rising Libyan oil exports add to oversupply concerns

(Updates throughout)
By Jessica Resnick-Ault
NEW YORK, Oct 22 (Reuters) - Oil prices ticked up on
Thursday, boosted by the possibility of an economic stimulus
package in the United States, but struggled to recover fully
from the previous session's losses when higher U.S. gasoline
inventories signalled a deteriorating demand outlook as
coronavirus cases soar.
Brent crude futures LCOc1 were 70 cents higher at $42.42 a
barrel at 2:29 p.m. EDT (1729 GMT) and U.S. West Texas
Intermediate (WTI) crude CLc1 futures gained 59 cents to
$40.62.
Both crude contracts shed more than 3% on Wednesday in their
steepest daily falls in three weeks.
Futures gained momentum early Thursday as U.S. House Speaker
Nancy Pelosi said the two sides were nearing an economic
stimulus package, boosting expectations that demand could
improve, said Bob Yawger, director of Energy Futures at Mizuho
in New York.
Shares on Wall Street also gained on Thursday in choppy
trading, as investors cheered the prospect of more fiscal
stimulus to support a pandemic-damaged U.S. economy, with more
data pointing to a slowing labor market recovery. U.S. gasoline stocks USOILG=ECI rose by 1.9 million
barrels last week, the Energy Information Administration (EIA)
said on Wednesday, compared with expectations for a drop of 1.8
million barrels. EIA/S
Overall product supplied - a proxy for demand - averaged
18.3 million barrels per day (bpd) in the four weeks to Oct. 16,
the EIA said, down 13% from the same period a year earlier.
Record new daily COVID-19 infection numbers in several U.S.
states and in Europe, along with further coronavirus lockdowns
and China's crackdown on outbound travel, all bode ill for fuel
demand. Worsening the outlook, hopes that U.S. lawmakers would reach
agreement with the White House on an economic stimulus package
dimmed late on Wednesday after President Donald Trump accused
Democrats of holding up a compromise deal. "(A deal) might improve the demand tone for a week or two,"
said Lachlan Shaw, head of commodity research at National
Australia Bank.
Adding to the supply concerns, Libyan oil exports are
quickly accelerating into October as loading restarts after the
easing of a blockade by eastern forces.
Libyan production has recovered to about 500,000 bpd and the
government in Tripoli expects that to double by the end of the
year. Goldman Sachs said it expects average Brent prices rising to
$59.40 next year from $43.90 this year, and WTI increasing to
$55.90 from $40.10.