Oil slips after stockpiles fall

Tokyo — Crude oil prices eased slightly on Thursday but held most of their gains from the previous session after US government data showed a fall in inventories, supporting the view that fuel demand is returning despite the coronavirus pandemic.

Brent crude was down 8 US cents at $45.35 a barrel by 1.50am GMT, after a gain of about 2% in the previous session. West Texas Intermediate oil was down by 6c at $42.61 a barrel after gaining 2.6% on Wednesday.

US crude oil, gasoline and distillate inventories fell last week as refiners ramped up production and demand improved, a government report showed.

US fuel demand rose to 19.37-million barrels a day last week, the highest since March, data from the Energy Information Administration (EIA) showed, while crude output fell to 10.7-million barrels per day (bpd) from 11-million bpd.

“The fourth quarter could see much higher oil prices if the energy market starts to brace for a shortage of oil,” said Edward Moya, senior market analyst at Oanda.

Crude inventories fell by 4.5-million barrels, compared with analysts’ expectations in a Reuters poll for a 2.9-million-barrel drop.

The EIA’s downward revision on Tuesday to a key US oil production forecast for 2020 also supported prices. US crude production is forecast to fall by 990,000 bpd in 2020 to 11.26-million bpd, steeper than the 600,000 bpd decline it forecast in July.

Capping gains, Opec said in a monthly report that world oil demand will fall by 9.06-million bpd in 2020, more than the 8.95-million bpd decline expected a month ago.

Increasing uncertainty over a stalemate in Washington on a stimulus package to support recovery from the deepest effect of the coronavirus pandemic may also weigh on prices, analysts said.

Reuters