Oil prices fall on high US petrol stocks and poor demand

London — Crude oil prices fell on Thursday after official data showed a big increase in US petrol stocks on the back of higher refinery runs, while demand remained subdued compared with pre-coronavirus levels.

Brent crude fell 32c, or 0.5%, to $62.84 a barrel by 10.13am GMT. US oil fell 45c, or 0.7%, to $59.32 a barrel.

While crude oil stocks in the US fell more than forecast by analysts, petrol inventories jumped sharply, the US department of energy said on Wednesday.

US crude oil inventories dropped by 3.5-million barrels last week to nearly 502-million barrels, and petrol stocks increased by 4-million barrels to just more than 230-million barrels, as refiners ramped up output before the summer driving season.

“The increase in oil product stocks is probably not due to weaker demand … but to high refinery utilisation,” Commerzbank analysts said.

Still, demand remains weakened by the impact of the coronavirus.

“Domestic petrol consumption is struggling to get over the 9-million barrels per day (bpd) mark, a sign that, despite the US being one of the trailblazers of vaccine rollout and the upward revision in economic growth, normalcy is still some way off,” PVM analysts said in a note.

At the same time, Russian oil output increased from average March levels in the first few days of April, traders said.

Iran and the US held talks with other powers on reviving a nuclear deal that almost stopped Iranian oil from coming to market, reviving tentative hopes Tehran might see some sanctions lifted and add to global supplies.

Still, the International Monetary Fund (IMF) said earlier this week that the huge public spending deployed to combat the Covid-19 pandemic may increase global growth to 6% this year, a rate not achieved since the 1970s.

Higher economic growth would boost demand for oil and its products. ANZ Research said it saw Brent crude around $75 a barrel in the third quarter.

Reuters