On Thursday oil prices dropped by around 1%, extending falls from the previous session amid surging U.S. crude inventories and weak demand from refineries.
Brent crude futures, the international benchmark for oil prices, were at $70.36 per barrel at 0652 GMT, down 0.9% or 63 cents from their last close. U.S. West Texas Intermediate (WTI) crude futures were down by 0.8% or 51 cents at $60.91 per barrel. Crude futures already fell by around 2% the previous day.
Edward Moya, the senior analyst at futures brokerage OANDA, said that rising inventories and a slowdown with refined product demand could suggest we will see further pressure on prices. As the Energy Information Administration reported on Wednesday, the U.S. crude oil inventories rose last week, hitting their highest levels since July 2017, due to weak refinery demand. Commercial U.S. crude inventories rose by 4.7 million barrels in the week ended May 17, to 476.8 million barrels, their highest since July 2017. Beyond weak refinery demand for feedstock crude oil, the increase in commercial inventories also came on the back of planned sales of U.S. strategic petroleum reserves (SPR) into the commercial market.
U.S. crude oil production climbed by 100,000 barrels per day (bpd) to 12.2 million bpd, putting output near its record of 12.3 million bpd reached late last month.
The head of a commodity strategy at Saxo Bank Ole Hansen said that concerns about slowing oil demand growth due to the negative impact on the global economy of the U.S.–China trade war were also weighing on oil prices.