NEW YORK: Oil fell below $30 a barrel on Wednesday as US crude inventories ticked up and gasoline demand remained below normal seasonal levels, offsetting hopes for a recovery in demand as some countries ease coronavirus lockdowns.
Brent crude has almost doubled since hitting a 21-year low on April 22, supported by expectations demand will recover and by a record supply cut led by the Organisation of the Petroleum Exporting Countries (OPEC).
Still, the benchmark and its US counterpart remain weighed down by tepid demand and high volumes in storage. Brent was down $1.32, or 4.2%, at $29.65 a barrel, having risen in the past six sessions. West Texas Intermediate (WTI) crude fell $1.20, or 4.6%, to $23.36.
US crude stocks and distillate inventories rose while gasoline inventories fell, the Energy Information Administration said on Wednesday.
Crude inventories rose by 4.6 million barrels in the week to May 1 to 532.2 million barrels, compared with analysts’ expectations in a Reuters’ poll for a 7.8 million-barrel rise.
“That smallish crude oil build was certainly supportive, but there are still problems facing the market in this report,” said John Kilduff, a partner at Again Capital in New York.
“That huge build in distillates shows that the impact from a lack of airline traffic and over the road truck traffic, so that doesn’t speak well about the economy and demand going forward.”
Gasoline demand is also below year-ago levels.
Italy, Spain, Nigeria and India as well as some US states began allowing some people to go back to work and opened up construction sites, parks and libraries. The easing of lockdowns should lead to a recovery in global oil demand, which in April was expected to collapse by at least 20%, an unprecedented drop, as governments told people to stay at home.
Published in The Express Tribune, May 7th, 2020.
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