Oil Down Amid Mixed US Stockpile Outlook



Oil Down Amid Mixed US Stockpile Outlook
Oil edged lower before government data that's expected to show a mixed outlook for U.S. stockpiles.

(Bloomberg) -- Oil edged lower toward $40 a barrel before government data that’s expected to show a mixed outlook for U.S. stockpiles, while global coronavirus deaths surpassed a grim milestone.

Futures slipped 0.6% in New York after closing at a one-week high on Monday. U.S. crude inventories probably rose by 1 million barrels last week, expanding for the first time in three weeks, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. Stockpiles of gasoline and diesel, however, are expected to extend declines. Global confirmed deaths from the virus -- which has eviscerated energy demand -- hit 1 million.

Oil has clawed its way back after dropping below $40 a barrel earlier in the month, but a resurgence of coronavirus cases in some major economies has raised concerns about a sustained recovery in demand. The market is also contending with an increase in supply from OPEC+ and Libya, which is boosting output as a blockade on its energy facilities is lifted.

“While we believe that the recovery in demand may slow, we do not see it declining from current levels at the moment,” said Warren Patterson, head of commodities strategy at ING Group in Singapore. The resurgence of Covid-19 cases and the tightening of restrictions in some regions is an ongoing concern, but it’s likely that governments will take a more targeted approach, rather than imposing national lockdowns, he said.

Prices

  • West Texas Intermediate for November delivery fell 0.7% to $40.30 a barrel on the New York Mercantile Exchange as of 7:55 a.m. London time after climbing 0.9% on Monday
  • Brent for November settlement lost 0.6% to $42.17 on the ICE Futures Europe exchange after rising 1.2% in the previous session
  • Crude futures on the Shanghai International Energy Exchange gained 1.3% to 265.8 yuan a barrel after slipping 1.7% on Monday

U.S. gasoline stockpiles fell by 1.2 million barrels last week for an eighth weekly draw, while distillate stockpiles dropped for a second week, according to the survey. Industry data is scheduled for Tuesday.

The outbreak, however, is forcing global refiners into a balancing act with their production due to the uneven rebound in fuel consumption. In India, processors are importing gasoline to cover demand as plants run below capacity, while in the U.S., refiners have idled some units to deal with access diesel supply.

Other oil-market news

  • The world’s biggest oil traders are building massive “data refineries” to process the millions of information points gathered each day and give them a fresh edge trading raw materials.
  • Talks have started in an effort to avoid a strike that could shut more than 20% of Norwegian oil and gas production, according to a statement from the Industry Energy union.

© 2020 Bloomberg L.P.



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