Crude oil prices continued to decline at Asia’s trading session on Friday. The surprising surge in U.S. crude oil stockpiles, and sluggish demand in gasoline, enabled oil traders to retreat from making bullish bets.
At the time of this report, Brent oil futures dropped 0.35% to trade at $39.9 and WTI futures were down 0.05% to trade at $37.28. Both oil benchmarks dropped below the $40 benchmark.
The U.S. Energy Information Administration (EIA), yesterday, reported a 2.032 million-barrel build in crude inventories for the week ended September 4, against expectations of a 1.335 million-barrel draw. EIA’s figures follow the American Petroleum Institute’s (API) report earlier in the week of a 2.970 million-barrel build.
Stephen Innes, Chief Global Market Strategist, AxiCorp, in a note to Nairametrics, spoke about the bearish trend presently prevailing itself at the oil futures market. He said:
“Oil is in track for the ugliest and biggest two-week drop since April as US inventories rise bearish to consensus at the horrible time as mid- September heralds the end of the US peak driving season,”
“All the while, refinery runs are hampered by weak margins and lingering hurricane impacts,”
“Still, positive for the view is gasoline warehouses are getting taken down, but this doesn’t lessen the forward-looking concerns that demand could deteriorate into the slower driving winter month, which this year is getting compounded by virus fears as the northern hemisphere moves indoors where the virus could spread quickly.”
Nairametrics views the price correction in crude oil as overdue, given a slowing demand recovery, and rising supply in the near-term.