Oil holds steady near multi-week lows on demand worries

Oil holds steady near multi-week lows on demand worries

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Melbourne: In Thursday morning, oil prices barely changed and hit near a few-week low overnight. Concerns about fuel demand due to the irregular recovery of the US economy.

At 0115 GMT, US West Texas Intermediate (WTI) crude oil futures rose 3 cents, or 0.1%, to $41.54 per barrel, while Brent crude oil futures prices fell 7 cents, or 0.2%, to 44.36 per barrel. Dollar.

On Tuesday, the two benchmark contracts both fell more than 2%, WTI fell to its lowest close in nearly four weeks, and Brent crude oil fell to its lowest point since August 21, after a survey by the US Federal Reserve showed a mixed economic recovery.

At the same time, data showed that employment growth was lower than expected in August, while factory orders in July were higher than expected.

The U.S. Energy Information Administration stated that, in further signs of limited recovery, in the week ending August 28, U.S. gasoline demand fell from 9.16 million barrels per day a week ago to 8.78 million barrels per day.

“All in all, we think there is enough spare oil capacity and enough pressure on demand growth to justify only a gradual increase in oil prices over the next 12 months,” Commonwealth Bank (CBA) commodities analyst Vivek Dhar said in a note.

U.S. refinery run rates fell to 76.5% of total capacity last week. While that was due to shutdowns ahead of Hurricane Laura, analysts said the upcoming refinery maintenance and the end of summer driving season would limit crude demand.

“These factors suggest a seasonal drop off in refinery runs and higher oil inventory levels as we advance through September,” said AxiCorp market strategist Stephen Innes.

CBA forecasts Brent will average $46 a barrel in the fourth quarter before rising to $55 by the end of 2021.

“We see downside risks to our outlook linked to the uncontrolled spread of COVID-19,” Dhar said in the note. 

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