Oil is on track to report its ‘biggest’ weekly drop since June amid dull demand concerns.
Brent crude LCOc1 was up by $0.05, or 0.1%, to $44.12 a barrel while US West Texas Intermediate (WTI) CLc1 fell $0.03 to $41.34 a barrel, Reuters reported.
Brent crude LCOc1 is heading for a 2.3% drop this week and WTI CLc1 is set for the first weekly drop in five weeks, according to the news agency.
PVM oil broker Stephen Brennock was quoted as saying: “Demand concerns are firmly front and centre of traders’ minds.
“Today’s non-farm US payroll report will be closely watched, and a disappointing number could be the next bearish catalyst.”
The Covid-19 pandemic has shattered worldwide demand by one-third. So far, the gasoline use has rebounded faster compared to that of distillates.
RBC Capital analyst Mike Tran said in a note: “Soft margins are likely to cap further crude rallies and we anticipate further run cuts this fall to expedite the rebalancing of product stocks.”
Tran added that the production kerbs led US gasoline inventories to fall at a ‘manic’ pace in the last two months.
According to official data, middle distillate stocks at Singapore, Asia’s oil hub, jumped 11.6% to their highest in more than nine years in the week ending 2 September.
FGE analysts said that rising cases of Covid-19 infections globally and renewed lockdowns would ‘dash’ hopes of a fall in oil stocks for some time.