Oil prices have slipped due to an unexpected rise in the US crude stocks as the Covid-19 pandemic continues to affect fuel demand.
Brent crude LCOc1 fell by $0.18, or 0.5%, to reach at $39.88 a barrel while US West Texas Intermediate (WTI) CLc1 futures were down by $0.14, or 0.4%, to settle at $37.16 a barrel, Reuters reported.
Both the benchmarks fell by 2% in the previous session.
Crude stocks rose last week in the US, against analysts’ expectations, as refineries slowly started operations after production sites were closed as Hurricane Laura storms hit the US Gulf of Mexico and the wider region.
On 27 August, Hurricane Laura raced towards the heart of the US oil industry in Louisiana and Texas. It is considered as one of the most powerful storms to ever hit the Texas-Louisiana border.
The news agency quoted ING Economics as stating: “While US crude oil production continues to recover following Hurricane Laura, the numbers show that refineries further reduced run rates over the last week.”
Major commodity traders are booking tankers for crude oil and diesel storage on the water, with supply increasing faster than consumption as a result of the stalled economic recovery due to the Covid-19 pandemic.
The rising stocks are likely to be a topic at the meeting of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC), and its allies, together known as OPEC+, on 17 September.
The OPEC+ Group has been curbing supplies to reduce inventories but analysts hint that the meeting is more likely to focus on compliance among the group members, rather than a discussion on seeking deeper cuts.