Oil drops as oversupply worries persist
LONDON, May 6, 2020 – Oil was down on Wednesday morning in Asia, losing some of its gains from the previous session.
Brent oil futures seesawed between gains and losses and was up a modest 0.16% to $31.02 by 10:21 PM ET (3:21 AM GMT), reversing initial losses. WTI futures slid 0.33% to $24.48.
WTI futures soared 20.45% and Brent oil futures jumped 13.86% during the previous session after the American Petroleum Institute (API) had predicted an 8.12- million-barrel-increase in crude oil inventories for the week ending May 1 overnight.
API predicted a larger increase of 9.987 million barrels for the previous week.
Even US President Donald Trump had his say, as he tweeted “Oil prices moving up nicely as demand begins again!” on Tuesday morning.
But investor caution rose the next day. Initial optimism that OPEC+ production cuts were reducing supply as demand slowly increased with some countries loosening lockdown measures earlier in the week was not enough to counter the black liquid’s oversupply dilemma.
Investors warned that global storage could be filled in weeks with the road to recovery long and uncertain.
Stacey Morris, director of research at Alerian, told CNBC, “The path to recovery for oil demand in the US and globally is still up in the air.”
Per Magnus Nysveen, Rystad Energy’s head of analysis, added, “[The oil] market is still vulnerable. The existing problems did not magically get resolved, the storage constraint is still there … We remain very cautious short term, but our view is that we will see a price recovery on the longer term.”
By Investing.com: https://www.investing.com/news/commodities-news/oil-drops-as-oversupply-worriespersist-2161957