As signs of increased US production coincided with worries about China’s weak energy demand on Thursday, oil prices continued their downward trend from the previous day. At 0630 GMT, Brent futures were down 48 cents at $80.70 per barrel. West Texas Intermediate (WTI) oil fell 53 cents to $76.13 a barrel in the United States.
The previous session dropped more than 1.5% in both benchmarks. In a move known as contango, WTI’s front-month contract also traded below the price for the second month, indicating that investors anticipate higher prices. On Thursday, the front month’s discount to the second month was trading at minus 17 cents.
“Markets analyst Tina Teng at CMC Markets in Auckland stated that worries about a record-high U.S. production rate put fresh pressure on oil prices, adding to an already concerning demand outlook.”
The U.S. Energy Information Administration (EIA) said that U.S. crude stockpiles increased by 3.6 million barrels last week to 421.9 million, significantly above analysts’ estimates in a Reuters poll for a 1.8 million-barrel increase. The United States continued to produce a record 13.2 million barrels of oil daily (bpd).
Asia’s oil refinery throughput decreased in October from the peak levels reached the month before due to a decline in the demand for industrial fuels and a narrowing of refining margins. Even so, October saw a pick-up in economic activity due to faster-than-expected industrial output and retail sales increases.
Data released on Thursday morning revealed that October saw a fourth consecutive month of declines in new house prices and a 20.33% decline in floor area sales year over year, which raised concerns about China’s real estate market.
According to Singapore-based IG market strategist Jun Rong Yeap, technical issues were also impeding price increases.
“Given that the tighter oil supply-demand dynamics have been less prominent from months ago, there has been some unwinding in previous bullish positioning ever since, with prices falling back below their 200-day moving average as a sign of sellers in control,” Yeap stated.