Oil prices recovered a bit on Wednesday morning after the Energy Information Administration reported an inventory build of 1.2 million barrels for the week to June 12. Fuel inventories, however, fell.
This compared with a 5.7-million-barrel build for the week before that. Analysts had expected the EIA to report a modest build of half a million barrels for the week to June 12. A day earlier, the American Petroleum Institute reported an inventory increase of 3.86 million barrels.
Oil prices have been on the decline over the past couple of days, swung around by fears of a second wave of Covid-19 on the one hand, and expectations that the world’s crude oil oversupply may be starting to inch down. For now, the bearish factors seem to have the upper hand.
The EIA’s report may, however, change the sentiment: the authority also reported a gasoline decline of 1.7 million barrels for the week to June 12, after it estimated a weekly build of 900,000 barrels for the previous week. Gasoline production increased last week, at 8.4 million bpd. This compared with 8.1 million bpd a week earlier.
In distillate fuels, the EIA estimated a 1.4-million-barrel draw in inventories for last week, after a 1.6-million-barrel build the previous week. Distillate fuel production averaged 4.5 million bpd, down on a week earlier.
https://www.oilandgas360.com/oil-falls-on-fears-of-more-covid-19-cases/
The World Health Organization said it was moving to update its guidelines after results showed the corticosteroid medication dexamethasone cut death rates by about a third among the most severely ill COVID-19 patients.
Yet concerns persisted about the spread of the virus in some regions and the risk of second waves in places where the spread had started to slow.
“The pandemic is rapidly evolving and the outlook for oil demand will therefore remain plagued by a degree of uncertainty,” said Stephen Brennock of broker PVM.
To contain the spread of a new virus outbreak in Beijing, scores of flights were cancelled and schools shut.
“We think the oil market is not currently pricing in a significant probability of either second waves of coronavirus cases in key consumers and the associated lockdowns, or anything less than a rapid return to economic business-as-usual,” Standard Chartered analysts said, pointing to a downside risk for prices in the medium term.
Weak economic activity is still weighing on demand for crude. Oil imports in Japan, the world’s fourth-biggest crude buyer, slumped in May to the lowest in almost three decades.
However, the Organization of the Petroleum Exporting Countries forecast a gradual recovery in oil demand and said record supply cuts by the group and other producers were already helping rebalance the market.