Leading commodity traders are booking tankers to store crude oil and diesel on the water, with supply outpacing consumption
Oil futures fell in early trade on Thursday, paring overnight gains, on worries about fuel demand after data showed US crude stockpiles rose last week, rather than dropping as expected, and Covid-19 cases continued to rise around the world.
US West Texas Intermediate (WTI) crude CLc1 futures fell 20 cents, or 0.5%, to $37.85 a barrel at 0056 GMT, after climbing 3.5% on Wednesday.
Brent crude LCOc1 futures dropped 14 cents, or 0.3% to $40.65 a barrel, after rising 2.5% on Wednesday.
As coronavirus case surged in several US states, the country’s crude stockpiles rose by 3 million barrels in the week to September 4, data from the American Petroleum Institute showed on Wednesday. That compared with analysts’ forecasts of a draw of 1.4 million barrels.
The US Energy Information Administration will release official weekly inventory data later on Thursday, a day later than normal following the US Labor Day holiday.
In a further bearish sign, leading commodity traders are booking tankers to store crude oil and diesel on the water, with supply outpacing consumption, according to trading sources and shipping data.
The rising stockpiles come ahead of a meeting on September 17 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+, which in August trimmed supply curbs from earlier this year on expectations demand would improve.
“This issue will be front and centre ... next week, where we expect a strong statement that if markets continue to weaken, the producer group will be prepared to trim output further,” Citi analysts said in a note.