Oil falls on weaker demand outlook after U.S. gasoline stocks build

Workers are seen near pumpjacks at a China National Petroleum Corp (CNPC) oil field in Bayingol, Xinjiang Uighur Autonomous Region, China August 7, 2019. (Reuters)

SULAIMANI (ESTA) — Oil prices fell in early trade on Thursday after a build in U.S. gasoline inventories pointed to a deteriorating outlook for fuel demand as COVID-19 cases soar in North America and Europe.

Brent crude futures retreated 13 cents, or 0.31%, to $41.60 a barrel at 0624 GMT. U.S. West Intermediate (WTI) crude futures fell 18 cents, or 0.45%, to $39.85 a barrel.

U.S. gasoline stocks rose by 1.9 million barrels in the week to October 16, the Energy Information Administration (EIA) said, compared with expectations for a 1.8 million-barrel drop, according to Reuters.

Overall product supplied, a proxy for demand, averaged 18.3 million barrels per day in the four weeks to Oct. 16, the EIA said – down 13% from the same period a year earlier.

“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,” said Lachlan Shaw, head of commodity research at National Australia Bank, Reuters reported.

With new daily COVID-19 infections hitting records in several U.S. states and in Europe, new lockdowns and China’s clampdown on outbound travel to help stem the spread of the disease bode ill for fuel demand.

Adding to the supply concerns, Libyan oil exports are quickly accelerating into October as loading restarts following the easing of a blockade by eastern forces.

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