Oil drops on worse than feared rise in United States fuel stocks

  • Oil drops on worse than feared rise in United States fuel stocks

Oil drops on worse than feared rise in United States fuel stocks

Oil prices slid for a second consecutive session on Thursday as the USA industry data showed a steep and surprising build-up in crude stockpiles, dampening hopes of a smooth demand recovery as the world begins to ease its way out of coronavirus lockdowns.

Data from the US industry group API showed crude stocks rose by 8.7 million barrels in the week to May 22, compared with analysts' expectations for a draw of 1.9 million barrels. Gasoline stockpiles fell unexpectedly, but refiners boosted output.

The West Texas Intermediate for July delivery was up 0.9 USA dollar to settle at 33.71 dollars a barrel on the New York Mercantile Exchange, while Brent crude for July delivery rose 0.55 dollar to close at 35.29 dollars a barrel on the London ICE Futures Exchange.

Oil prices have rebounded in recent weeks on anticipation of improved demand after the coronavirus pandemic sapped worldwide consumption by roughly 30 per cent. The danger now is that with production cuts to be eased, we may see another glut in supply if demand is still low and economies aren't entirely out of lockdown.

Global benchmark Brent crude was trading at $34.21 per barrel at 0636 GMT for a 1.52% decline after closing Wednesday at $34.74 a barrel.

Oil prices gains on crude supply cut hopes, ease of lockdowns restrictions

"There's definitely a feeling those cuts have come through as well as you could expect", said Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group.

The decline in oil benchmarks extended losses on Wednesday over uncertainty about Russia's commitment to deep output cuts ahead of a 9 June meeting of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, a grouping dubbed OPEC-plus.

Saudi Arabia and some OPEC members are considering extending record production cuts of 9.7 million barrels per day beyond June, but have yet to win support from Russian Federation.

Prices were also under press after U.S. President Donald Trump's economic adviser, Larry Kudlow, said China was making "a big mistake" with national security legislation on Hong Kong. The United States and other nations said this would threaten freedom and breach a 1984 Sino-British agreement on the autonomy of the former UK-colony.