Oil prices dip as inventory builds

A line handler helps dock the oil tanker, Texas Voyager, as it pulls into its mooring to offload its crude oil at Port Everglades on April 21, 2020 in Fort Lauderdale, Florida.
Joe Raedle | Getty Images

Oil prices eased on Thursday after U.S. data showed a surprise build in crude stockpiles last week, confirming an industry report.

Brent futures fell 25 cents, or 0.6%, to $40.54 a barrel. West Texas Intermediate crude fell 75 cents, or 2%, to settle at $37.30 per barrel.

The U.S. Energy Information Administration (EIA) said crude inventories rose 2.0 million barrels last week. Analysts in a Reuters poll had forecast a 1.3-million barrel draw, and the American Petroleum Institute on Wednesday reported a 3 million-barrel increase.

"The market was a little surprised by the build given that much of the Gulf of Mexico production had not returned but this was offset as refineries ... have struggled to return after Hurricane Laura," said Andrew Lipow, president of Lipow Oil Associates in Houston, noting "The decline in gasoline and distillate demand was another disappointment."

Brent futures remained in oversold territory after dropping to their lowest since mid June earlier this week. Brent's Relative Strength Index (RSI) was under 30 for a fifth straight day for the first time since March. WTI was in oversold territory for a fourth day.

In China, Bank ANZ said oil imports were likely to level off as independent refineries reach their maximum quotas.

In a further bearish sign, leading commodity traders were booking tankers to store crude oil and diesel.

The rising stockpiles come ahead of a meeting on Sept. 17 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+.

"Despite the recent slide in oil prices, we think that the OPEC+ leadership will continue to direct its efforts towards securing better compliance rather than pushing for deeper cuts at this stage," RBC analysts said.