Oil prices headed lower on Thursday morning after a weekly inventory report showed that supplies in the U.S. were climbing, further raising fears that demand for oil may outstrip rising stockpiles.
On Thursday, West Texas Intermediate crude for October delivery on the New York Mercantile Exchange fell 54 cents, or 1.4%, at $37.51, following a 3.5% rise, while November Brent crude, the global benchmark, rose lost 43 cents, or 1.1%, to reach $40.36 a barrel after its 2.5% gain in the previous session.
Oil futures finished higher Wednesday, with U.S. prices reclaiming less than half of the more than 7% drop suffered in the previous session as worries over the demand outlook, driven by the pandemic, continued to limit crude’s upside potential.
Data from the American Petroleum Institute late Wednesday showed that U.S. crude supplies rose by 3 million barrels for the week ended Sept. 4, according to sources. The data come ahead of a more closely followed weekly report from the Energy Information Administration, which will be released later Thursday morning. The data is being released a day later due to the Labor Day holiday in the U.S., which was observed on Monday.
The EIA data are expected to show crude inventories down by 500,000 barrels last week, according to analysts polled by S&P Global Platts. They also forecast a supply decline of 2.5 million barrels for gasoline and an inventory increase of 300,000 barrels in distillates.
“Oil prices are losing ground again on indications that US crude oil inventories rose last week, maintaining the bearish price correction that September has introduced,” wrote analysts at Rystad Energy.
“The long overdue bearish correction that September finally brought upon oil prices is not one to brush off within days,” wrote Rystad’s head of oil markets Bjornar Tonhaugen, in a note.
“After a shock decline earlier this week, prices ticked up a bit yesterday but don’t expect them to quickly blossom further,” she said.
The weekly data from API comes after the EIA lowered its 2021 growth forecast for global consumption of petroleum and liquid fuels by 500,000 barrels per day from its August forecast, to about 99.6 million barrels a day, even as it raised its 2020 forecasts for WTI and Brent crude-oil prices, natural-gas prices, and U.S. crude production.
Looking ahead, commodity investors are awaiting a Sept. 17 market-monitoring meeting of the Organization of the Petroleum Exporting Countries and its allies including Russia, forming a group known as OPEC+, which in August trimmed supply cuts from earlier this year on hope of improved demand amid the pandemic.