OIL prices fell for the second consecutive session on Thursday (May 30), after the US government reported weak fuel demand in the country and a surprise jump in petrol and distillate fuel stockpiles.
Brent crude futures fell by US$1.74, or 2.1 per cent to settle at US$81.86 a barrel. US West Texas Intermediate crude futures fell by US$1.32, or 1.7 per cent, to US$77.91 a barrel.
US crude stocks fell more than expected last week as refiners ramped up to their highest utilisation rates in over nine months, data from the US Energy Information Administration (EIA) showed. However, there was a surprise jump in petrol and distillate fuel inventories as demand weakened even as output rose.
“Weakness in petrol markets have continued to drag down the rest of the oil complex,” Alex Hodes, oil analyst at brokerage StoneX, wrote on Thursday.
Analysts had expected the US Memorial Day holiday on May 27, the start of the US summer driving season, would boost fuel demand. Yet EIA’s measure of petrol demand slipped about 2 per cent from the prior week to 9.2 million barrels per day (bpd).
“I was looking for a draw in petrol, in particular, ahead of the holiday weekend but when refiners are cranking it out, that is too much to drain product inventories,” said John Kilduff, partner at Again Capital.
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“The petrol demand is still a good number, even though I would have expected that to be up closer to 9.5 (million bpd) going into the last holiday weekend,” he said.
US petrol futures fell more than 2 per cent to a three-month low of US$2.40 a gallon, while ultra-low sulphur diesel futures settled at an over 11 month low.
Further pressuring oil prices, investors’ risk-appetite has been subdued by the prospect of delayed monetary easing in the US and Europe, analysts at financial brokerage ActivTrades said. “Fear trading” is dominating financial markets ahead of Friday’s US consumer price index data, they wrote to clients.
Oil investors are also cautious ahead of an Opec+ meeting this weekend. The producer group will decide whether to extend, deepen or unwind supply cuts.
Soft fuel demand and rising global oil inventories may help convince Opec+ producers, which include the Organization of the Petroleum Exporting Countries (Opec) and allies including Russia, to maintain supply cuts when they meet on Jun 2, Opec+ delegates and analysts say. REUTERS
