Crude oil prices closed with a second week of losses, which left the energy market down by more than 10%, over the past two weeks.
The slide comes higher than the predicted crude Inventories in the world’s largest economy, and caused anxiety among oil traders already concerned about gasoline demand, as the northern hemisphere head for winter.
West Texas Intermediate crude, the major benchmark for U.S. crude prices, settled the day up WTI lost 6.1% w/w, extending last week’s drop of 7.5%.
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Brent crude, the global international benchmark for oil, closed the New York trading session at $39.83. Brent lost 6.6% for the week, adding to its previous week’s drop of 5.3%.
Last week’s plunge came after the Energy Information Administration (EIA), reported a weekly crude inventory gain of 2 million barrels, above the 1.3 million barrels anticipated earlier by analysts.
It was the first surge in oil stockpiles since mid-July. In six previous weeks, the EIA had reported a total crude drawdown of more than 38 million barrels.
READ: EIA increases Brent price projection by $2.50 for 2020
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, spoke on the prevailing macro oil traders are reacting to. He said;
“However, there is light at the end of the vaccine tunnel, as AstraZeneca’s COVID-19 trials may resume next week, according to some news reports. The drugmaker had suspended its vaccine trials, after an unexplained illness of a UK participant. And this pivot is being consumed on the positive side of the ledger.
“In reality, prices above Brent $45/bbl were getting ahead of the recovery, as most of the low hanging bullish fruit had been consumed.
“And traders simultaneously found themselves at the end of the bullish runway running headlong into one of the biggest price impediments of them all – the ‘end of summer’ seasonality waning demand.
“Markets shifted into what can’t go up, must go down mode, as profit-taking initially got the ball rolling downhill, then all the rest of the known pilled on top.”