Published: Sun, October 18, 2020
Economy | By

Bigger Than Expected Crude Inventory Draw Boosts Oil Prices

Bigger Than Expected Crude Inventory Draw Boosts Oil Prices

Brent crude futures fell 23 cents on Friday, settling at $42.93 a barrel, and US West Texas Intermediate (WTI) crude futures dropped 8 cents to settle at $40.88 a barrel.

"The energy markets are certainly marching to their own drummer at the moment", said Michael McCarthy, chief market strategist at CMC Markets and Stockbroking, adding that recent oil price volatility may have attracted more trader positions.

U.S. crude oil inventories decreased by 3.8 million barrels during the week ending October 9, the U.S. Energy Information Administration reported on Thursday.

Oil prices moved lower on Thursday as investors continued to worry about demand outlook amid the pandemic.

But under a "delayed recovery scenario", it said the energy demand recovery is pushed back to 2025.

The Organization of the Petroleum Exporting Countries (OPEC) also forecast a slower demand recovery on Tuesday.

A further weakening of demand could threaten plans by OPEC and allies to taper in 2021 the record oil output cuts they made this year.

In the United States, the number of Americans filing new claims for jobless benefits rose last week to a two-month high.

Some European countries were reviving curfews and lockdowns to fight a surge in new coronavirus cases, with Britain imposing tougher COVID-19 restrictions in London on Friday.

On the supply side, workers have been returning to U.S. Gulf of Mexico platforms after Hurricane Delta and Norwegian workers to offshore rigs after ending a strike. The growth forecast is 80,000 bpd less than expected a month ago.

Also adding to the upside in prices, rumours keep gyrating around the possibility that OPEC+ members could postpone their intentions to increase the oil output - originally scheduled for the end of the year - amidst the persistent advance of the second wave of the coronavirus pandemic. "The group can react easily to any large production disruption by using its spare production capacity to ramp up production in case prices spike", UBS analysts said in a note.

Oil pared losses as declining US crude and fuel inventories eased concerns following reports of a sluggish labor market.

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