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Oil prices hover around multi-week lows on demand worries

Published 09/02/2020, 09:24 PM
Updated 09/03/2020, 03:15 AM
© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County

By Shu Zhang and Sonali Paul

SINGAPORE/MELBOURNE (Reuters) - Oil prices were hovering around multi-week lows on Thursday as worries about falling U.S. gasoline demand and sluggish economic recovery from the COVID-19 pandemic dented sentiment.

U.S. West Texas Intermediate (WTI) crude (CLc1) futures were up 4 cents, or 0.10%, at $41.55 a barrel by 0626 GMT. Brent crude (LCOc1) dipped 1 cent, or 0.02%, to $44.42 a barrel.

Both benchmarks fell more than 2% on Wednesday, with WTI sliding to its lowest close in nearly four weeks and Brent at its weakest since Aug. 21.

U.S. gasoline demand last week fell to 8.78 million barrels per day (bpd) from 9.16 million bpd a week earlier. [EIA/S]

Other data, such as U.S. private employers hiring fewer workers than expected for a second straight month in August, also fed fears that economic recovery was lagging.

Oil markets, however, drew some support from Iraq's denial it was seeking exemption from OPEC+ oil cuts during the first quarter of next year.

Analysts warn that the upcoming refinery maintenance and the end of summer driving season would also limit crude demand.

WTI crude has come under pressure "after U.S. refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil", ANZ Research said in a note on Thursday.

"This is compounded by weak refining margins, which are their lowest in nearly a decade for this time of the year."

Due to shutdowns ahead of Hurricane Laura, U.S. refinery utilization rates fell by 5.3 percentage points to 76.7% of total capacity.

"These factors suggest a seasonal drop off in refinery runs and higher oil inventory levels as we advance through September," AxiCorp market strategist Stephen Innes said.

Commonwealth Bank (CBA) forecasts Brent will average $46 in the fourth quarter before rising to $55 by the end of 2021.

"There is enough spare oil capacity and enough pressure on demand growth to justify only a gradual increase in oil prices over the next 12 months," CBA commodities analyst Vivek Dhar said in a note.

© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County

The Organization of the Petroleum Exporting Countries and allies, a grouping known as OPEC+, is currently cutting output by 7.7 million barrels per day (bpd) until December to support prices as the coronavirus crisis hammers demand.

Latest comments

With the rig count at multiple months of record breaking lows and oil stable in the low $40.00, the other shoe will drop with "supply worries in the US" as a headline in a few months.
time to buy in my opinion
time to buy MUR in my opinion
Yes. Finally, WTI crude oil price is catching up with fundamentals. I guess the funds, who are net long, shall liquidate some of their positions and book gains now.
This article makes no sense.
weird, why stimulused guys ignoring oil
time to buy oil stocks now, oil will rebound with a vengeance eventually and unexpectedly, you will be thrilled to have bought oil now, actually I doubled down when oil futures were negative, I knew that would never last, these prices will move up along with natural gas, another depressed commodity in higher and higher demand.
Do you know how is possible oil rate high now.im form Bangladesh
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