London — Oil prices fell on Thursday after US industry data showed a surprise steep build in crude oil inventories, dampening hopes of a smooth recovery in demand as some countries ease coronavirus lockdowns.
The decline in oil benchmarks extended losses on Wednesday over uncertainty about Russia’s commitment to deep output cuts ahead of a June 9 meeting of oil cartel Opec and its allies, including Russia (Opec+).
Brent crude futures were down 1.12%, or 39c at $34.35 a barrel, after dropping to as low as $33.62 in earlier trade. US West Texas Intermediate (WTI) crude futures were down 1.52%, or 50c, at $32.31 a barrel at 9.45am GMT. The US futures slipped earlier as much as 5% to a low of $31.14.
“The rise in American Petroleum Institute (API) inventories was unexpected and means this evening’s US Energy Information Administration (EIA) crude inventories will be monitored closely. That appears to be weighing on sentiment in Asia,” said Jeffrey Halley, senior market analyst at Oanda.
Data from industry group API showed US 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.
“Crude has been trying to break some resistance but the API number is keeping the price where it is,” Olivier Jakob of PetroMatrix consultancy said.
“We’re heading into the early June Opec+ meeting so we’ll be seeing sound bites such as Saudi Crown Prince Mohammed bin Salman having a conversation with Russia … but we need some good stats for the price to go higher.”
Russian President Vladimir Putin and Bin Salman agreed during a telephone call on further “close co-ordination” on oil output restrictions, the Kremlin said on Wednesday.
National Australia Bank’s head of commodity research, Lachlan Shaw, said that with WTI holding above $30 a barrel, Opec+ will be closely watching to see whether US shale oil producers, who have break-even prices in the high $20 and low $30 dollar range, step up production.