Oil holds steady near multi-week lows amid demand concerns

3 September 2020 (Last Updated September 3rd, 2020 10:33)

Oil prices were held steady at multi-week lows, after industry group EIA data showed a fall in gasoline demand and lag in fuel demand recovery from Covid-19 pandemic.

Oil holds steady near multi-week lows amid demand concerns
Due to shutdown of operations ahead of Hurricane Laura, utilisation rates of US refinery fell by 5.3% to 76.7% of total capacity. Credit: Rob Oo.

Oil prices were held steady at multi-week lows, after industry group EIA data showed a fall in gasoline demand and lag in fuel demand recovery from Covid-19 pandemic.

Brent crude oil futures rose by $0.02 or 0.05% to $44.45 a barrel while US West Texas Intermediate (WTI) crude futures increased by $0.09 or 0.22% to reach $41.60 a barrel, Reuters reported.

Data released by EIA highlighted a fall in US gasoline demand to 8.78Mbpd in the week ending 28 August from 9.16Mbpd a week earlier.

Meanwhile, data showing that US private employers are recruiting fewer workers than expected for a second consecutive month in August hinted that economic recovery in the country was lagging.

ANZ Research was quoted by the news agency as saying: “WTI crude has come under pressure after US refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil.

“This is compounded by weak refining margins, which are their lowest in nearly a decade for this time of the year.”

Due to shutdown of operations ahead of Hurricane Laura, utilisation rates of US refinery fell by 5.3% to 76.7% of total capacity.

AxiCorp market strategist Stephen Innes said: “These factors suggest a seasonal drop off in refinery runs and higher oil inventory levels as we advance through September.”

However, oil markets gained some support after Iraq denied media reports about an exemption plan from OPEC+ production cuts during the first quarter of 2021.

The Organization of the Petroleum Exporting Countries (OPEC), and its allies, together known as OPEC+, is currently cutting output by 7.7Mbpd until December this year to support oil prices.