- NYMEX crude oil fell 0.80% during the day to a new low of $39.71 per barrel since October 15.
- US gasoline inventories unexpectedly increased by 1.895 million barrels, and analysts previously estimated a decrease of 1.5 million barrels.
- The negotiation of a new stimulus package in the US Congress has become more and more important.
On Thursday, international oil prices bottomed out and rebounded, benefiting from OPEC+’s possible slowdown in production increase. However,the renewed surge in new coronavirus cases in Europe and the United States, the blockage of negotiations on the US stimulus plan, and the increase in US gasoline inventories all indicate a worsening outlook for fuel demand.
At 16:36 Pacific Time, NYMEX crude oil futures rose 0.77%, to $40.34 per barrel. ICE Brent crude oil futures rose 0.79%, to $42.06 per barrel.
NYMEX crude oil fell 0.80% during the day to a new low of $39.71 per barrel since October 15. Brent crude oil fell by 0.55%.
Earlier news said that the two major oil producers, Saudi Arabia and Russia, have once again negotiated on the demand issue, which has ignited investors’ optimistic expectations for new measures on the supply side.
US Energy Information Administration (EIA) data released last day showed that as of the week of October 16, US gasoline inventories unexpectedly increased by 1.895 million barrels, and analysts previously estimated a decrease of 1.5 million barrels.
EIA data also showed that for the four weeks ending on October 16, the supply of alternative demand oil products averaged 18.3 million barrels per day, a decrease of 13% from the same period last year.
Lachlan Shaw, head of commodity research at National Australia Bank, said:
“The latest EIA report showed an unexpected increase in gasoline inventories, which came at the same time as reduced gasoline output because of refinery outages due to Hurricane Delta. So the implication is gasoline demand is pretty soft.”
Affected by the epidemic, exports have become an important source of income for many US oil companies, with US conventional crude oil exports exceeding 3 million barrels per day. However, US production is not expected to recover to the peak of nearly 13 million barrels per day in 2019, which may suppress exports.
In several states in Europe and the United States, the number of new confirmed cases of coronavirus in a single day hit a new high. In order to prevent the spread of the epidemic, some places had to re-impose travel restrictions, which exacerbated the haze in the outlook for fuel demand.
The US Congress’ negotiations on new stimulus measures suffered setbacks on Wednesday, when President Trump accused Democrats of reluctance to compromise on economic aid issues. The news further deteriorated the outlook for energy demand.
ANZ Bank said in a report that the second wave of the new coronavirus epidemic is raging and Americans’ willingness to travel by car is declining. The negotiation of a new stimulus package in the US Congress has become more and more important.
The bank analyst, Shaw, said that even if Congress approves the epidemic relief plan, it may only temporarily raise oil prices. The demand tone may improve within one to two weeks, but as the spread of the new coronavirus epidemic accelerates, the upward resistance of oil prices will increase.
The greater supply-side concern comes from Libya. The country’s oil exports in October were rapidly increasing, and as the eastern armed forces lifted the blockade, the production facilities restarted loading operations. Libya’s oil production has recovered to about 500,000 barrels per day, and the government expects to double by the end of the year.
“The resurgence in coronavirus cases is seeing the US motorist increasingly putting the brakes on. This makes the negotiations on a US stimulus package even more important,” ANZ Research said in a note.