Crude oil prices drop after U.S stockpiles surged higher
Crude oil prices dropped at the Asian trading session on Thursday. The fall in energy prices is coming on growing concerns about fuel demand, after recent data showed that U.S. crude inventories increased last week, rather than falling as expected, coupled with COVID-19 caseloads surging higher.
At the time this report was drafted, U.S. West Texas Intermediate lost about 0.74%, to trade at $37.79 a barrel, after gaining 3.5% yesterday
Brent crude prices dropped 0.51% to trade at $40.58 a barrel, after rising 2.5% on Wednesday.
As COVID-19 caseloads surged in several parts of the United States, the world’s largest economy’s stockpiles surged by 3 million barrels in the week to Sept. 4, according to data from the American Petroleum Institute report released yesterday.
Stephen Innes, Chief Global Market Strategist at AxiCorp, gave insights on why crude prices rallied at America’s trading session on Wednesday. He said:
“The catalyst for the fall in crude has also been the sell-off in equity markets and especially what appears to have been a bubble in tech stocks where Tesla, the epitome of the anti-crude oil play, tumbled massively this week.
“So it would make sense also that as stock markets surge again, oil prices will push higher, and that’s exactly what happened overnight. Still, investors may need to fill Tuesday’s Nasdaq gap to get oil prices kicking into a larger gear.
“The slope and curve economics are not quite there at the moment, but in the absence of further OPEC interventions, should the curve steepen more and tanker rates remain favorable, trading house demand could provide a keen level of support.”
In the background, continues to be Covid-19 concerns and the delicate balancing act needed to return economies to a new normal.