By Adedapo Adesanya
Oil prices receded by 2 per cent on Thursday as data showed a surprise build in crude stockpiles in the United States last week.
This pulled the Brent crude down by 2.5 per cent or $1.02 to $39.74 per barrel and dragged the US West Texas International (WTI) crude down by 2.76 per cent or $1.04 to $37.00 per barrel.
The US Energy Information Administration (EIA) reported that crude inventories rose 2.0 million barrels last week, beating expectations from analysts which had forecast a 1.3-million-barrel draw.
This is, however, lower than expectations from another industry group, the American Petroleum Institute (API), which projected a 3 million-barrel increase.
This was the first weekly rise in seven weeks and made the total US crude inventories, excluding those in the Strategic Petroleum Reserve (SPR), to hit 500.4 million barrels.
The news was considered a surprise because much of the Gulf of Mexico production was shut due to the Hurricane Laura and production was yet to resume, meaning most refineries are not fully up and running in the country.
The supply reports were each delayed by a day due to Monday’s US Labor Day holiday.
This is coming ahead of a September 17 market monitoring committee meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+), which will meet to look at the development in the oil market.
The group in August tapered record supply cuts from earlier this year on the hopes of improved demand amid the pandemic. However, with recent slides in prices, the problem seems to be making a come back.
OPEC+ oil production climbed by 1.71 million barrels a day to 34.63 million barrels a day in August from a month earlier, according to a recent survey.
Analysts, however, said despite the recent slide in oil prices, the OPEC+ leadership will continue to direct its efforts towards securing better compliance from laggards rather than pushing for deeper cuts at this stage.
The market continues to feel the impact of the coronavirus as more than 905,000 people have died from the disease while over 27.9 million infections have been confirmed in more than 200 countries and territories. More than 20 million people have recovered to date.
In a further bearish pull, tankers are being built to store crude oil and diesel as global supply continues to rise without a complementary demand.
