By Geoffrey Smith
Investing.com -- Crude oil prices stayed stuck in the same range they have been in all week on Thursday, as another set of data showing a painfully slow labor market recovery in the U.S. vied with more upbeat private assessments of demand trends.
By 9:20 AM ET (1320 GMT), U.S. West Texas Intermediate futures were down 0.2% at $37.88 a barrel, while the global benchmark Brent was up 0.2% at $40.75 a barrel.
"Traders are divided between two indicators today, crude stocks building in the U.S. – a bearish one – and the rise in demand for road fuels, an optimistic one,” said Rystad Energy market analyst Louise Dickson in emailed comments.
Dickson said she expects the crude market to return to balance this month and slip into deficit thereafter, but warned of risks to that scenario from the continuing pandemic, which has the capacity to affect big emerging market consumers as well as more developed markets such as the U.S.
“Globally, in June, we see total liquids demand increasing 6% m/m, but the big question mark is whether this steep slope can be sustained,” she said. “Closures of schools in Beijing and a surge of cases from Brazil to Turkey warrant a dosage of fear over a second-wave of the virus – and potentially more lockdowns.”
Earlier in the day, the Joint (NASDAQ:JYNT) Ministerial Monitoring Committee set up by OPEC and its allies, which monitors the organization’s deal on output restraint, showed that compliance in May was only running at 86% of what had been agreed, resulting in overproduction of 1.3 million barrels a day.
Overproduction has been widely acknowledged as a problem for the bloc, with Iraq and Nigeria particularly prone to exceeding their quotas.
However, the news came against a backdrop of data showing crude stockpiles still at high and in some cases rising levels. U.S. government data on Wednesday had confirmed a rise in U.S. inventories last week, while figures from consultancy Clipper Data showed that floating storage off the Chinese coast had topped 50 million barrels for the first time.
Fears of an enduring glut were somewhat moderated by comments on Bloomberg from major traders Vitol and Trafigura, who claimed that demand is rebounding by an average of 1.6 million barrels a day from one week to the next.
Elsewhere, natural gas futures were unable to make meaningful recovery from the all-time lows they hit on Wednesday. By 9:20 AM ET, they were down 0.9% at $1.62 per mmBtu.