Oil drops on worse than feared rise in U.S. fuel stocks

By Sonali Paul MELBOURNE (Reuters) - Oil prices fell in early trade on Thursday after U.S.

Reuters May 28, 2020 07:05:38 IST
Oil drops on worse than feared rise in U.S. fuel stocks

Oil drops on worse than feared rise in US fuel stocks

By Sonali Paul

MELBOURNE (Reuters) - Oil prices fell in early trade on Thursday after U.S. crude, gasoline and heating oil inventories all rose more than expected, dousing hopes of a smooth recovery in demand from coronavirus lockdowns.

The decline extended losses from Wednesday on uncertainty about Russia's commitment to deep oil production cuts in the lead-up to a June 9 meeting of the Organization of the Petroleum Exporting Countries and its allies, dubbed OPEC+.

U.S. West Texas Intermediate (WTI) crude futures fell as much as 5% to a low of $31.14 and were down 3%, or 97 cents, at $31.84 at 0019 GMT.

Brent crude futures last traded down 2.3%, or 78 cents, at $33.96.

Data from the American Petroleum Institute industry group showed crude stocks rose by 8.7 million barrels in the week to May 22, compared with analysts' expectations for a draw of 1.9 million barrels.

Gasoline stocks rose by 1.1 million barrels, more than 10 times the build analysts had expected, and stocks of diesel and heating oil rose by 6.9 million barrels, nearly four times as much as anticipated.

"It just indicates that demand recovery is progressing but it's not strong enough yet to be really self-sustaining," National Australia Bank's head of commodity research, Lachlan Shaw said.

The market will be looking to see if data from the U.S. Energy Information Administration later on Thursday matches API.

Shaw said crude was also weaker amid scepticism about the tightness of Russia's relationship with Saudi Arabia, even after Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman agreed on further "close coordination" on oil output cuts.

With WTI holding above $30, OPEC+ will be closely watching to see whether U.S. oil shale oil producers who have breakeven prices in the high $20 and low $30 dollar range step up production.

"There is a risk that we see those wells that have been shut in start to reverse and we see more supply return to the market," Shaw said.

(Reporting by Sonali Paul; editing by Richard Pullin)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

U.S. consumer confidence soars to 14-month high; house prices accelerate
Business

U.S. consumer confidence soars to 14-month high; house prices accelerate

By Lucia Mutikani WASHINGTON (Reuters) - U.S. consumer confidence jumped to a 14-month high in April as increased vaccinations against COVID-19 and additional fiscal stimulus allowed for more services businesses to reopen, boosting demand and hiring by companies. The upbeat survey from the Conference Board on Tuesday, which also showed a strong increase in vacation plans, suggested the economy continued to power ahead early in the second quarter after what appears to have been robust growth in the first three months of the year, believed by many economists to have been the second strongest since 2003.

Musk trolls Bezos as space race between world's richest men heats up
Business

Musk trolls Bezos as space race between world's richest men heats up

(Reuters) - The space race between the world's two richest men went into hyperdrive on Tuesday after Tesla chief Elon Musk took a swipe at Jeff Bezos' attempt to challenge a major NASA contract. The two billionaires, who have been trying to launch long-range orbital rockets, were competing for a coveted contract from the government to build a spaceship to deliver astronauts to the moon as early as 2024. Musk won.

S&P 500, Nasdaq close at record highs ahead of tech earnings wave
Business

S&P 500, Nasdaq close at record highs ahead of tech earnings wave

By Shivani Kumaresan and Noel Randewich (Reuters) - The S&P 500 and Nasdaq closed at record highs on Monday, fueled by Tesla Inc and other heavyweight growth stocks ahead of a deluge of earnings reports this week. The Nasdaq's record high close confirmed the end of an 11% correction in the index that began after its previous record high close on Feb.