Oil spreads losses as stocks rise amid weaker demand

TOKYO (Reuters) – Oil prices fell for a second day on Friday, pressured by a surprise rise in US stocks as the coronavirus pandemic continues to erode demand for fuels.

Raw brent LCOc1 fell 18 cents, or 0.5%, to $ 39.88 a barrel at 0337 GMT, after falling nearly 2% on Thursday, while US crude CLc1 it fell 14 cents, or 0.4%, to $ 37.16 a barrel, after falling 2% in the previous session.

Both major benchmarks are down around 6.5% for the week and are heading for a second week of declines as hopes for a steady recovery in fuel demand are lowered amid signs of coronavirus outbreaks. second wave.

In the United States, reserves increased last week, contrary to expectations, as refineries slowly returned to operations after production sites were closed due to storms in the Gulf of Mexico and the wider region.

“While US crude oil production continues to recover after Hurricane Laura, figures show that refineries reduced run rates even further over the past week,” ING Economics said in a note.

US crude inventories rose 2.0 million barrels, compared with forecasts for a 1.3 million barrel decline in a Reuters poll. [EIA/S] [ENERGYUSA]

In a new bearish sign, traders were beginning to reserve tanker trucks again to store crude oil and diesel, amid a stalled economic recovery as the COVID-19 pandemic continues unabated.

Onshore storage remains close to capacity as supplies continue to outpace demand, so the use of so-called floating storage is back in vogue due to cheap financing costs and the spread between contracts for delivery now and the months that follow make it favorable for traders to keep the oil for later. reduction.

Rising stocks is likely to be a topic at a Sept. 17 meeting of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, a group known as OPEC +.

The group has been withholding supply to reduce stocks, but analysts say the meeting is likely to focus on compliance among members, rather than seeking deeper cuts.