Oil prices add to losses as supplies swell amid weak demand

Oil prices add to losses as supplies swell amid weak demand

Crude oil prices surged higher on Wednesday, rebounding strongly after suffering a bad setback a session earlier, amid hopes the USA inventory data for last week will show a drop in stockpiles.

Oil headed for its first back-to-back weekly losses since April's price rout as swelling USA stockpiles added to signs that the global energy demand recovery will take longer than previously anticipated.

The U.S. crude benchmark has fallen around 13% this month as the end of the U.S. summer driving season, a stalling Asian demand recovery and evidence the virus is making a comeback in Europe all weighed on sentiment.

Brent oil futures were down 0.42% to $40.62 by 11:25 PM ET (4:25 AM GMT) and WTI Futures fell 0.63% to $37.8, remaining below the $40-mark.

Even though oil prices have rebounded, the myriad of macroeconomic headwinds is applying significant downward pressure on the commodity, with OPEC+ production cuts essential to help stabilise the market. As far as buying is concerned, I would need to see a daily candlestick closing above the 200 day EMA to be enticed into doing that, something that would take a significant move to say the least as it is now sitting at $41.65.

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Analysts polled by S&P Global Platts had forecast a fall of 500,000 barrels.

The market is now concerned that there might be need to store again more crude and this worry is evident in a scramble to book floating storage again for the future, now that prices are still at non-emergency levels.

ETAutoCrude inventories in the United States rose 2.0 million barrels last week, against expectations for a 1.3 million-barrel decrease in a Reuters poll.

Imperial Oil Ltd shut production at its 220,000-barrel-per-day Kearl oil sands site in Alberta this month due to an outage of part of the Polaris pipeline in Alberta.

"Crude prices have been pressured by poor fundamentals: a weak global recovery threatened by the potential for returning COVID-19 cases to damage economies; large current inventories of oil and petroleum products and plentiful spare capacity in both production and refining". "Demand will then take off in the second half of 2021".

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