Oil prices fell further due to a record build in the US crude stockpiles and concerns that resurgence in Covid-19 cases could hit the fuel demand recovery.
Brent crude slipped $0.31 or 0.8% at $40.00 a barrel, while US West Texas Intermediate (WTI) crude futures were down $0.26 or 0.7% to $37.75 a barrel, Reuters reported.
On 24 June, Brent crude traded at its highest levels since prices crashed in early March this year.
Phillip Futures senior commodities manager Avtar Sandu was quoted by the news agency as saying: “Prices retreated after the EIA data signalled an inventory build much higher than expected.”
However, analysts said the build of 1.4 million barrels in crude inventories was mostly due to a ‘flotilla’ of Saudi cargoes booked by the US refiners when prices crashed in March.
OANDA senior market analyst Jeffrey Halley said: “Markets had previously ignored much higher inventory numbers in recent times when momentum was strong. In other words, the facts have been fitted to the narrative the market wanted to see.”
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Worries about a second wave of coronavirus infections in several US states, where lockdown restrictions had been lifted, and a rapid surge of infections in South America and South Asia are expected to keep a cap on fuel demand, said market analysts.
National Australia Bank commodity research head Lachlan Shaw said: “The latest trends there are not encouraging.”
AxiCorp market strategist Stephen Innes noted that mobility data from Google showed driving in the US states of Texas, Florida and, to a certain extent, California was ‘flatlining’.