By Peter Nurse
Investing.com - Oil markets slumped Thursday, amid fears of a second wave of the Covid-19 virus impacting demand while U.S. crude stockpiles hit an all-time high.
At 8:40 AM ET (1240 GMT), Crude Oil WTI Futures traded 6.9% lower at $36.88 a barrel. The international benchmark Brent contract fell 5.8% to $39.30.
U.S. commercial{ {ecl-75|| crude oil inventories}} grew by 5.72 million barrels last week, according to data from the Energy Information Administration, released late Wednesday. This surprised the market expecting a small drawdown, but backed up the report from the American Petroleum Institute late Tuesday.
“This increase now sees total U.S. commercial crude oil inventories stand at 538 million barrels, surpassing the levels seen back in early 2017, and in fact the highest level going as far back as 1982,” analysts at ING wrote, in a research note.
These figures have been influenced by the arrival of supplies bought by refiners when Saudi Arabia flooded the market in March and April, data from the Energy Information Administration showed.
The effect of the Saudi import surge on pricing should be "transitory", said Jeffrey Halley, market analyst at OANDA.
But the EIA data also showed gasoline stockpiles grew more than expected to 258.7 million barrels.
These numbers tend to suggest that although supply has been cut back in the U.S., with many drillers finding the low prices unprofitable, the demand pick up has been slow even as states reopen their economies.
That was before the Federal Reserve offered up its gloomy prognosis of the U.S. economy for the rest of the year.
Another source of worry is the potential for a second wave of infections from the Covid-19 virus across the U.S., which could prompt another at least partial shutdown.
Total U.S. cases topped 2 million on Wednesday, with new infections rising slightly after five weeks of declines.
Bloomberg also reported that Texas had registered its highest one-day total since the pandemic emerged, while Florida recorded this week the most new cases of any seven-day period, while California’s hospitalizations have risen in nine of the past 10 days.