Oil prices decline as EIA reports first weekly U.S. crude-stock climb in 7 weeks

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(MarketWatch) Oil prices declined on Thursday after U.S. government data revealed a weekly climb in U.S. crude inventories, on the heels of six consecutive weeks of declines, raising expectations of an oversupplied market as uncertainty continues to surround the outlook for demand.

The Energy Information Administration reported Thursday that U.S. crude inventories rose by 2 million barrels for the week ended Sept. 4—the first weekly rise in seven weeks. Total U.S. crude inventories, excluding those in the Strategic Petroleum Reserve stood at 500.4 million barrels, about 14% above the five-year average for this time of year.

That compared with an average forecast by analysts polled by S&P Global Platts for a fall of 500,000 barrels. The American Petroleum Institute on Wednesday reported a climb of 3 million barrels, according to sources. The supply reports were each delayed by a day due to Monday’s U.S. Labor Day holiday.

“The surprise rise in stockpiles suggests that demand is a lot weaker than expected,” said David Madden, market analyst at CMC Markets UK, in a market update.

In Thursday dealings, West Texas Intermediate crude for October delivery CL.1, -0.53% CLV20, -0.55% on the New York Mercantile Exchange fell 35 cents, or 1%, at $37.70 a barrel. November Brent crude BRN.1, -0.61%   BRNX20, -0.61%, the global benchmark, lost 34 cents, or 0.8%, to reach $40.45 a barrel after a 2.5% gain in the previous session.

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Oil futures finished higher Wednesday, with U.S. prices reclaiming less than half of the more than 7% drop suffered in the previous session as worries over the demand outlook, driven by the pandemic, continued to limit crude’s upside potential.

Thursday’s EIA data also showed crude stocks at the Cushing, Okla., storage hub edged up by about 1.9 million barrels for the week, while total domestic oil production climbed by 300,000 barrels to 10 million barrels per day.

Gasoline supply, meanwhile, fell by 3 million barrels, while distillate stockpiles declined by 1.7 million barrels. The S&P Global Platts survey had shown expectations for a supply decline of 2.5 million barrels for gasoline, but distillates were expected to rise by 300,000 barrels.

On Nymex, October gasoline RBV20, -0.38% shed 0.6% to $1.1123 a gallon, while October heating oil HOV20, -1.16% traded at $1.0936 a gallon, down 1.1%.

The latest supply data come after the EIA, in a monthly report issued Wednesday, lowered its 2021 growth forecast for global consumption of petroleum and liquid fuels by 500,000 barrels per day from its August forecast, to about 99.6 million barrels a day, even as it raised its 2020 forecasts for WTI and Brent crude-oil prices, natural-gas prices, and U.S. crude production.

Looking ahead, commodity investors are awaiting a Sept. 17 market-monitoring meeting of the Organization of the Petroleum Exporting Countries and its allies including Russia, forming a group known as OPEC+, which in August trimmed supply cuts from earlier this year on hope of improved demand amid the pandemic.

OPEC+ oil production climbed by 1.71 million barrels a day to 34.63 million barrels a day in August from a month earlier, according to an S&P Global Platts survey released Wednesday.

Rounding out action on Nymex, prices for the October natural gas contract NGV20, -2.29% traded at $2.368 per million British thermal units, down 3.8 cents, or 1.6%.

The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas rose by 70 billion cubic feet for the week ended Sept. 4. That was a bit higher than the increase of 64 billion cubic feet forecast by analysts polled by S&P Global Platts.

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