Crude oil prices fall for second consecutive day

Oil prices fell on Thursday for a second consecutive session as data from the U.S. industry showed a sharp and unexpected rise in oil stockpiles, dampening expectations of a smooth recovery of demand as the world continues to ease its way out of coronavirus lockdowns.

The decline extended losses from Wednesday on uncertainty over Russia’s commitment to deep cutbacks in oil output in the run-up to a meeting of the Petroleum Exporting Countries Organization and its allies on June 9, dubbed OPEC+.

The crude futures in the U.S. West Texas Intermediate (WTI) were down 4.4 percent, or $1.44 at $31.37 a barrel at 0402 GMT after slipping as much as five percent to a $31.14 low earlier in the session.

Brent crude futures dropped 3.2 per cent or $1.10 per barrel to $33.64.

“A surprise to consensus API (American Petroleum Institute) inventory build (data) and fear of Russia turning up production weighs on oil prices,’’ said Stephen Innes, Chief Global Markets Strategist at AxiCorp.

“As is often the case during a run-up up to an OPEC+ meeting, the focus is squarely on Russia’s commitment and understandably so as historically they have been the laggard within the OPEC+.’’

Data from the U.S. industry group API showed that crude stocks fell by 8.7 million barrels in the week before May 22, compared to the forecasts of analysts for a draw of 1.9 million barrels.

Gasoline stocks rose by 1.1 million barrels, more than 10 times expected by build analysts, and diesel and heating oil stocks fell by 6.9 million barrels, almost four times as much as expected.

“It just indicates that demand recovery is progressing but it’s not strong enough yet to be really self-sustaining,’’ National Australia Bank’s Head of Commodity Research, Lachlan Shaw, said.

The market will look to see whether U.S. results. Energy Information Administration matches API later on Thursday.

Despite WTI remaining above $30, OPEC+ must watch closely to see whether U.S. oil shale oil producers, despite high $20 and low $30 dollar rates breaking down, are rising demand.

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