Oil prices dip amid rise in US inventories and stock market slide
US stockpiles rose last week as refineries returned to operations after production sites were shut down due to storms in Gulf of Mexico
Oil prices fell for a second day and were on track for a second weekly fall after US stock markets tumbled and American stockpiles rose unexpectedly.
Brent was down 0.5 per cent at $39.86 a barrel at 2:32pm UAE time, after falling nearly 2 per cent on Thursday, while US crude dropped 0.21 per cent, to $37.22 a barrel, having fallen 2 per cent in the previous session.
Both benchmarks were 6 per cent down for the week.
"Financial markets are continuing to set the tone, including on the oil market. The renewed slide on US stock markets dragged oil prices down with it," Commerzbank analyst Eugen Weinberg said.
Heavyweight tech-related stocks resumed their decline on Thursday as the number of Americans filing new claims for unemployment benefits remained high.
"Stock markets dived, oil followed, and Brent lost 15 per cent of its value in five trading sessions as money managers liquidated," oil broker PVM's Tamas Varga said.
Also dampening the market mood, the US senate killed a Republican bill that would have provided around $300 billion (Dh1.1 trillion) in new coronavirus aid.
Fears about an oversupply also added to the general feeling of uncertainty, Mr Weinberg said.
In the US, stockpiles rose last week, against expectations, as refineries slowly returned to operations after production sites were shut down due to storms in the Gulf of Mexico and the wider region.
US crude inventories rose 2 million barrels, compared with forecasts for a 1.3 million-barrel decrease in a Reuters poll.
In a further bearish sign, traders were starting to book tankers again to store crude oil and diesel, amid a stalled economic recovery as the Covid-19 pandemic continues.
Increasing stockpiles are likely to be a subject at a meeting on September 17 of the market monitoring panel of the Organisation of the Petroleum Exporting Countries (Opec) and allies including Russia.
The group known as Opec+ has been withholding supply to reduce stockpiles, but analysts say the meeting is likely to focus on compliance among members, rather than seek deeper cuts.
Following Saudi Arabia, Kuwait also lowered its official selling price to Asia for October, to counter slower demand.
Updated: September 11, 2020 04:00 PM