Oil prices slid nearly 2 per cent on Thursday after U.S. data showed a surprise build in crude stockpiles last week related in part to ongoing reductions at refineries along the Gulf of Mexico following Hurricane Laura.
Brent futures fell US 73 cents, or 1.8 per cent, to settle at $40.06 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 75 cents, or 2.0 per cent, to settle at $37.30.
After the market close, WTI briefly traded down over $1 a barrel and Brent was down as much as 99 cents.
The U.S. Energy Information Administration (EIA) said crude inventories rose 2.0 million barrels last week.
That confirmed the direction of the 3 million-barrel increase reported by the American Petroleum Institute (API), but was a surprise compared with the 1.3 million-barrel decrease that analysts forecast in a Reuters poll.
“Today’s crude data looked bearish… with about the only supportive element being the fact that the 2 (million-barrel) build was less than that indicated by the API,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, noting prices could fall further unless Gulf of Mexico refiners fully restart soon after shutting for Hurricane Laura.
Brent and WTI futures dropped to their lowest since mid June earlier this week and have remained in oversold territory over the past several days. Brent’s Relative Strength Index (RSI) was under 30 for a fifth straight day for the first time since March.
In China, Bank ANZ said oil imports were likely to level off as independent refineries reach their maximum quotas.
In a further bearish sign, leading commodity traders were booking tankers to store crude oil and diesel.
The rising stockpiles come ahead of a meeting on Sept. 17 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+.
“Despite the recent slide in oil prices, we think that the OPEC+ leadership will continue to direct its efforts towards securing better compliance rather than pushing for deeper cuts at this stage,” RBC analysts said.
