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Oct 7, 2020

Energy | Oil Price Report: Oil falls nearly 2% on oversupply concerns

 

2-3 minutes - Source: CNBC


An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.

An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.

Mario Tama | Getty Images

Oil prices fell nearly 2% on Wednesday after U.S. President Donald Trump dashed hopes for another stimulus package to boost the coronavirus-hit economy and after U.S. crude inventories rose in the most recent week.

Brent crude futures were down $1.15, or 2.7%, to $41.51 a barrel, while West Texas Intermediate (WTI) crude settled 72 cents, or 1.8% lower at $39.95 per barrel.

White House Chief of Staff Mark Meadows on Wednesday said he was not optimistic that a comprehensive deal could be reached on further COVID-19 financial aid and that the Trump administration backed a more piecemeal approach.

“Trump pulling out of relief negotiations generates a lot of uncertainty about the economy,” said Harry Tchilinguirian, head of commodities research at BNP Paribas.

Oil prices were also hit by a slightly larger-than-expected build in U.S. crude inventories. Crude inventories rose by 501,000 barrels in the week to Oct. 2 to 492.9 million barrels, compared with analysts’ expectations in a Reuters poll for a 294,000-barrel rise.

Both gasoline and distillate inventories fell.

“The inability to coordinate another stimulus package is having a negative impact on demand sentiment, but the data shows that we perhaps have something to be encouraged about,” said Tony Headrick, energy market analyst at CHS Hedging.

Energy companies secured offshore platforms and evacuated workers on Tuesday, some for the sixth time this year, as Hurricane Delta threatened U.S. oil output in the Gulf of Mexico.

The storm has shut 29% of offshore oil production in the Gulf, which accounts for 17% of total U.S. crude output.

In Norway, the Lederne labour union said on Tuesday that it will expand oil strike from Oct. 10 unless a wage deal can be reached. Six offshore oil and gas fields shut down on Monday because of the strike, cutting Norway’s output capacity by 8%.

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