Oil prices plunged on Thursday after US industry data showed a surprise steep build in crude oil inventories, dampening hopes of a smooth recovery in demand as some countries begin to ease their way out of coronavirus lockdowns.
The decline in oil benchmarks extended losses from Wednesday over uncertainty about Russia's commitment to deep output cuts ahead of a June 9 meeting of the Organization of the Petroleum Exporting Countries and its allies, a grouping dubbed OPEC+.
US West Texas Intermediate (WTI) crude futures were down 3 per cent, or 98 cents, at $31.83 a barrel at 0709 GMT. The US futures slipped earlier as much as 5 per cent to a low of $31.14.
Brent crude futures were down 2 per cent, or 71 cents at $34.03 per barrel, after dropping to as low as $33.63.
“The rise in API (American Petroleum Institute) inventories was unexpected and means this evening's US EIA crude inventories will be monitored closely. That appears to be weighing on sentiment in Asia,” said Jeffrey Halley, senior market analyst at OANDA.
Data from industry group API showed US crude stocks rose by 8.7 million barrels in the week to May 22, compared with analysts' expectations for a draw of 1.9 million barrels.
“With the oil market assumed to be rebalanced at a much quicker pace than anyone expected, investors are now attempting to digest the outcome of the upcoming OPEC+ meeting,” said Stephen Innes, chief global markets strategist at AxiCorp.
“As is often the case during a run-up to an OPEC+ meeting, the focus is squarely on Russia's commitment and understandably so as historically they have been the laggard within the OPEC+.”
With WTI holding above $30 a barrel, OPEC+ will be closely watching to see whether US shale oil producers, who have breakeven prices in the high $20 and low $30 dollar range, step up production, National Australia Bank's head of commodity research, Lachlan Shaw said.
A letter from the Editor
Dear Readers,
The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.
Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.
In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.
We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.
But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.
I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.
A little help from you can make a huge difference to the cause of quality journalism!
Support Quality Journalism