Futures Movers: Oil edges lower as worries remain over rising U.S. inventories and coronavirus cases

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Oil futures drifted lower Thursday, extending a decline seen the previous session after data showed an unexpected rise in U.S. crude inventories, as alarming growth in the number of U.S. cases of coronavirus point to the potential for further business shutdowns, dulling the prospects for energy demand.

“Virtually all demand categories” showed a week-on-week decline in the report from the Energy Information Administration Wednesday, said Robbie Fraser, senior commodity analyst at Schneider Electric.

The report showed a weekly fall of 98,000 barrels per day in implied demand for finished motor gasoline to 8.55 million barrels a day. Implied demand for distillate fuel oil fell 470,000 barrels per day to 3.22 million barrels a day.

“That fall will tie into broader concerns around a rise in COVID cases in the U.S. and the potential economic headwinds that could bring moving forward,” Fraser said in a daily note.

West Texas Intermediate crude for September delivery CL.1, -0.59% CLU20, -0.59% on the New York Mercantile Exchange fell 23 cents, or 0.6%, to $41.67 a barrel, while September Brent crude BRN.1, -0.85% BRN00, -0.85% was off 37 cents, or 0.8%, at $43.92 a barrel on ICE Futures Europe.

Crude prices finished slightly lower Wednesday, pulling back a day after settling at their highest since March, pressured by an unexpected weekly climb in U.S. crude stockpiles. The EIA reported Wednesday that U.S. crude inventories rose by 4.9 million barrels for the week ended July 17. That compared with an average forecast by analysts polled by S&P Global Platts for a decline of 1.9 million barrels.

The EIA data had a “somewhat bearish tone” to it, wrote analysts at JBC Energy, a Vienna-based consulting firm.

“What we mean by that is that there was a build in the aggregate volume of stored crude and refined products of close to 3.5 million barrels and maybe more importantly a large jump in the implied crude supply metric,” they said. “After having averaged below 10.5 million barrels a day for nine consecutive weeks, the 1.7 million barrel a day leap higher is a first warning sign that the narrative of only a very shallow rebound due to shut-in barrels returning to market still cannot be taken for granted,” they wrote.

Among the petroleum products, August gasoline RBQ20, -0.72% fell by 0.7% to $1.2749 a gallon and August heating oil HOQ20, -0.48% inched down by 0.07% to $1.2698 a gallon.

Natural-gas futures, meanwhile, moved higher in the wake of a weekly EIA update on supplies of the commodity, as traders eyed storm activity in the Gulf of Mexico.

“Aa tropical depression is building off the coast of Texas and may develop into Tropical Storm Hanna before reaching land” said Christin Redmond, commodity analyst at Schneider Electric, in a note. “The storm is likely to hit an area with offshore oil and gas production assets, which may temporarily reduce gas production in the near-term.”

Meanwhile, the U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas rose by 37 billion cubic feet for the week ended July 17. That was a bit larger than the average increase of 33 billion forecast by analysts polled by S&P Global Platts.

August natural gas NGQ20, +3.27% traded at $1.742 per million British thermal units, up 3.6%.