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Hazloc Heaters
Copper Tip Energy Services
Copper Tip Energy
Hazloc Heaters

Oil Falls to Near $38 on Signs U.S. Crude Stockpiles Expanded

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These translations are done via Google Translate

By Saket Sundria and Alex Longley

(Bloomberg) Oil retreated to near $38 a barrel after a U.S. industry report signaled a surprise jump in crude inventories, underscoring the market’s patchy road to rebalancing.Futures dropped 1.6% in New York. The American Petroleum Institute reported that stockpiles expanded by 8.42 million barrels last week, according to people familiar with the data. If confirmed by government figures later on Wednesday, it would be the largest build since the end of April. Inventories at a key European hub jumped to a two-year high last week, Genscape Inc. reported.

All eyes are on government data after API reports weekly gain

Oil’s recovery from the virus-driven demand crash and swollen stockpiles remains uneven. Consumption is showing signs of uptick in India, where Indian Oil Corp. is boosting processing at its refineries this month. Still, the OECD is forecasting a sharp contraction in the global economy this year, and one that could get worse if there’s a second wave of virus infections.

“Indications from the American Petroleum Institute show that stocks built quite a lot,” said Rystad Energy head of oil markets Bjornar Tonhaugen. “Shut-in production returning and a rise in Covid-19 cases scare traders — and markets.”

  • West Texas Intermediate for July delivery fell 61 cents to $38.32 a barrel on the New York Mercantile Exchange as of 8:38 a.m. local time
  • Brent for August settlement lost 1.6% to $40.54 on the ICE Futures Europe exchange

The weakness in crude prices has also been accompanied by a softer market structure in recent days. Brent futures for August were at their biggest discount to September this month on Wednesday. Similarly, key swaps that help price North Sea crude have softened so far this week, according to data from brokerage Eagle Commodities.

Sky Eye Measurement
Sky Eye Measurement

Meanwhile, the chaos engulfing OPEC member Libya continued, with the Sharara and El-Feel fields stopping production after brief restarts. Armed groups have forced halts at both fields, just days after the nation’s oil industry was showing signs of restarting.

Supplies of U.S. distillates, which include diesel, rose by 4.27 million barrels last week, while crude stockpiles at the storage hub of Cushing, Oklahoma, fell by 2.29 million barrels, the API reported. The Energy Information Administration is expected to report nationwide crude inventories dropped by 1.85 million barrels, according to a Bloomberg survey.

Other oil-market news
  • Goldman Sachs Group Inc.’s commodities business generated more than $1 billion in revenue this year through May as oil prices crashed below zero
  • Nigeria will implement all of the oil-production cuts agreed with the OPEC+ coalition by mid-July at the latest, the head of its state oil company said.
  • Asian diesel prices flipped into backwardation for the first time in three months as demand rebounded after the easing of lockdowns, compared with other regions that are grappling with oversupply of the fuel.

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