Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil prices fall on surging US crude stockpiles, economic concerns

Published 23/05/2019, 02:54
Updated 23/05/2019, 02:54
© Reuters. FILE PHOTO: Oil pumps are seen after sunset outside Vaudoy-en-Brie

© Reuters. FILE PHOTO: Oil pumps are seen after sunset outside Vaudoy-en-Brie

By Henning Gloystein

SINGAPORE (Reuters) - Oil prices dropped on Thursday, extending falls from the previous session amid surging U.S. crude inventories and weak demand from refineries.

Brent crude futures, the international benchmark for oil prices, were at $70.62 per barrel at 0109 GMT, down 37 cents, or 0.5 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down by 31 cents, or 0.5 percent, at $61.11 per barrel.

Crude futures already fell by around 2 percent the previous day.

"Rising inventories and a slowdown with refined product demand could suggest we could see further pressure (on prices)," said Edward Moya, senior analyst at futures brokerage OANDA.

U.S. crude oil inventories rose last week, hitting their highest levels since July 2017, due to weak refinery demand, the Energy Information Administration said on Wednesday.

Commercial U.S. crude inventories rose by 4.7 million barrels in the week ended May 17, to 476.8 million barrels, their highest since July 2017, the EIA data showed.

Beyond weak refinery demand for feedstock crude oil, the increase in commercial inventories also came on the back of planned sales of U.S. strategic petroleum reserves (SPR) into the commercial market.

U.S. crude oil production climbed by 100,000 barrels per day (bpd) to 12.2 million bpd, putting output near its record of 12.3 million bpd reached late last month.

Ole Hansen, head of commodity strategy at Saxo Bank, said "concerns about slowing (oil) demand growth due to the negative impact on the global economy of the U.S.–China trade war" were also weighing on oil prices.

Countering these bearish price factors have been escalating political tensions between the United States and Iran, as well as ongoing supply cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) that started in January in an effort to prop up the market.

"Large but opposing forces have kept Brent in a $70-$75 per barrel range in recent weeks," Morgan Stanley (NYSE:MS) said in a note on oil markets published this week.

"Macro economic data has rapidly deteriorated, and this is reflected in weaker oil demand. At the same time, downside risk to supply is materialising in key countries (adding to OPEC's production cuts)," the U.S. bank said.

"On balance, however, we still see tightness in 2H19," Morgan Stanley said, adding it expected Brent to trade in the $75-$80 per barrel range in the second half of 2019.

French bank BNP Paribas (PA:BNPP) said high inventories meant that OPEC would likely keep its voluntary supply cuts in place.

"Supply management is here to stay," the bank said.

© Reuters. FILE PHOTO: Oil pumps are seen after sunset outside Vaudoy-en-Brie

(GRAPHIC: U.S. oil output, stock & drilling - https://tmsnrt.rs/2DwTUBQ)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.