By Barani Krishnan
Investing.com – Oil prices fell back after a one-day reprieve on Thursday as the first U.S. stockpile build in seven weeks pushed back into negative territory a market trying to emerge from its worst two weeks since May.
New York-traded , the key indicator for U.S. crude prices, settled down 75 cents, or 2%, at $ 37.30 per barrel. WTI lost 6.8% last week and is on track to shed another 7.5% this week.
London-traded crude, the global benchmark for oil, closed the New York trading session down 73 cents, or 1.8%, at $ 40.06. Brent fell lost 6.6% last week and is on track to fall 5.3% this week.
increased by 2 million barrels last week, the Energy Information Administration said, reporting a build above the 1.3-million forecast by analysts. It was the first hike of its kind since the week ended July 17, with drawdowns within that period removing more than 38 million barrels from the market.
declined 2.9 million barrels, slightly more than expected, the EIA said, adding that stocks fell by 1.7 million barrels, reversing all of the previous week’s build.
Yet, traders focused on the crude build amid concerns about refinery runs as the U.S. peak summer driving season draws to a close.
Refinery utilization fell 5% last week, the second time in a week that it has fallen as much.
Cushing, Oklahoma, the delivery point for contracted barrels of WTI, saw a near 2 million-barrel build. Exports dipped slightly to below 3 million barrels per day.
On the bearish side as well, the EIA raised output estimates for U.S. crude by 300,000 barrels per day to 10 million bpd, accounting for the redeployment of production platforms on the Gulf Coast of Mexico that were preemptively shut during last month’s Hurricane Laura.
Oil market economics were clouded over the past four months by euphoria more than statistics attesting to business reopenings from Covid-19 lockdowns.
Tepid since July — despite unemployment returning to single digit — and a resurgent dollar that’s anything but good for commodities had capped crude in the low $ 40s.
The floor finally came off the market last week after OPEC kingpin Saudi Arabia cut the selling price of its oil, ostensibly to preserve or widen its market share. The Saudi move came weeks after OPEC’s global producer alliance called OPEC+ said it was winding back production cuts observed since May.
Those ominous actions were followed by U.S. refiners slashing their crude utilization just as the peak summer driving season drew to a close. The return of the to its bullish 93-handle and a rout on Wall Street completed a perfect storm for crude longs.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.