Oil Futures Settle Sharply Lower As Inventories Rise
Crude oil prices declined sharply on Wednesday as worries about outlook for energy demand rose after data showing a surge in coronavirus cases raised possibilities of another lockdown in several parts of the globe.
Data showing increased production in U.S. shale fields weighed as well on crude oil prices.
West Texas Intermediate Crude oil futures for August ended down $2.36 or about 5.8% at $38.01 a barrel.
Brent crude futures were down by about $2.30 or 5.5% at $40.29 a barrel.
The International Monetary Fund’s weak forecast for the global economy this year has raised concerns that energy demand may not pick up any significantly in the near term.
According to a report from the Energy Information Administration, crude oil stockpiles increased by 1.4 million barrels in the week ended June 19, significantly higher than an expected increase of about 300,000 barrels.
Gasoline stockpiles were down 1.7 million barrels last week, much more than the expected level. Meanwhile, distillate inventories were up 250,000 barrels, beating forecasts for a drop of over 600,000 barrels.
According to a report from the American Petroleum Institute, released late Tuesday, U.S. crude inventories rose by a much bigger than expected 1.75 million barrels for the week ending June 19, well ahead of analysts’ expectations for a build of 300,000 barrels.
White House health advisor Dr. Anthony Fauci warned Tuesday that parts of the U.S. are beginning to see a “disturbing surge” of Covid-19 cases. Fauci told Congress that the next two weeks would be critical in trying to keep the virus under control.
Arizona, Texas and California reported daily records of infections Tuesday, raising fears that authorities could tighten measures in an effort to halt the spread.
The IMF has has sharply lowered its forecast for global growth this year. It predicts that the global economy will shrink 4.9% this year, significantly worse than the 3% drop it had estimated in its previous report in April. It would be the worst annual contraction since immediately after the Second World War.
For the United States, the IMF predicts that gross domestic product will fall as much as 8% this year, even more than its April estimate of a 5.9% drop.