Oil prices slid for a second day on Friday, as a shock build in the United States crude inventories hurt already weakened sentiment, with the coronavirus outbreak continuing to erode fuel demand.
Brent crude was down 14 cents, or 0.35%, at $39.92 a barrel by 11:28 West Africa Time, after falling nearly 2% on Thursday, while U.S. crude dropped 2 cents, or 0.05%, to $37.28 a barrel, having fallen 2% in the previous session.
Both Bent crude and the U.S. crude fell by over 6% during the week and approached a second week of successive decline as optimism fades for a consistent fuel demand recovery amid signs of surge in coronavirus cases.
Inventories climbed in the U.S. last week against expectations as refineries gradually reopened after production sites were closed down to storms in the Gulf of Mexico and wider region.
The inventory data will already add to frazzled nerves of oil speculators, confronted by a widening contango in the Brent futures curve and concerns about global consumption,” said Jeffrey Halley, senior market analyst at OANDA.
U.S. crude stockpiles leapt by 2 million barrels relative to projections for a 1.3 million decline in a Reuters poll.
Traders started to book tankers again in order to store crude oil and diesel in the midst of an arrested economic recovery as the coronavirus pandemic rages on.
Onshore storage pushes close to full capacity as supplies continue to outstrip demand. The use of the so-called floating storage is having its moment again as cheap financing costs and the spread between contracts for delivery now and in later months makes it favourable for traders to keep oil for later sale.
Expanding inventories will probably be a subject at a meeting on 17th September of the market monitoring panel of the Organisation of the Petroleum Exporting Countries (OPEC) and its Russia-led allies, a grouping called OPEC+.
The cartel has been withholding supply to reduce inventories but analysts say the meeting will probably centre on compliance among members, rather than pursue more profound cuts.
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