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Oil prices extended declines on Friday, under pressure from a surprise rise in US stockpiles and ongoing weak demand from the coronavirus pandemic.
Brent crude was down 8 cents, or 0.2 per cent, at $39.98 a barrel by 0110 GMT, after falling nearly 2 per cent on Thursday, while US crude was off by 2 cents at $37.28 a barrel, having fallen 2 per cent in the previous session. Both major benchmarks were headed for a second week of declines.
In the US, stockpiles rose last week against expectation as refineries slowly returned to operations after production sites were shut down due to storms in the Gulf of Mexico and wider region.
“Crude production is starting to return following a couple of storms, but a weak demand outlook and the start of maintenance season will keep the pressure on oil prices,” said Edward Moya, senior market analyst at OANDA.
Crude inventories in the US rose 2.0 million barrels last week, against expectations for a 1.3 million-barrel decrease in a Reuters poll.
In a further bearish sign, traders were starting to book tankers again to store crude oil and diesel, amid a stalled economic recovery as the COVID-19 pandemic continues unabated.
Onshore storage remains near capacity as supplies continue to outpace demand, so the use of so-called floating storage is back in vogue as cheap financing costs and the spread between contracts for delivery now and later months makes it favourable for traders to hold oil for later sale.
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