Oil slides as demand worries re-emerge, U.S. Gulf rigs reopen
Oil prices slid on Thursday following two straight days of gains. This came after worries about fuel demand were reinforced by reopening production in the U.S. Gulf following Hurricane Sally’s passage.
Brent crude futures dropped 0.8%, or 36 cents, at $41.86 per barrel after rising 4.2% on Wednesday. U.S. West Texas Intermediate crude futures fell 1.1%, or 43 cents, at $39.73 per barrel after a 4.9% gain in the last session.
Prices were weighed by a bigger-than-expected increase in U.S. distillate stocks, including diesel and heating oil, which raised worries about fuel demand in the United States.
Distillate stocks rose by 3.5 million barrels last week, while weekly demand for the fuel dropped by 2.81 million bpd, down 27.2% year-on-year.
Distillate stocks are at their highest levels this time of year since 1991, while U.S. refiners’ margins for producing distillate are at their lowest in 10 years.
U.S. refiners processed 13.5 million bpd of oil in the previous week, down 19.3% year-on-year.
Energy companies are beginning to return crews to offshore U.S. Gulf platforms after Hurricane Sally’s passage. Almost 500,000 bpd of oil output was closed ahead of the storm’s arrival.