Oil drops for fifth straight day after US inventories rise

Tokyo

OIL prices declined for a fifth consecutive session on Thursday falling around 1 per cent after official data showed a further increase in US crude and fuel inventories, while the ever-present pandemic clouded the prospects for a demand recovery.

Brent crude was down 74 cents, or 1.1 per cent, at US$67.26 a barrel by 0745 GMT after dropping 0.6 per cent on Wednesday. US oil was also down 65 cents, or 1 per cent, at US$63.95 a barrel, having fallen 0.3 per cent the previous session.

Both contracts are down around 3 per cent over the last five days of declines. Government data on Wednesday showed US crude inventories have risen for four straight weeks after refineries in the south were forced to shut due to severe cold weather.

An industry report estimating a decline had raised hopes the run of gains might have stopped. US crude inventories increased by 2.4 million barrels last week, the US Energy Information Administration (EIA) said on Wednesday. That was a day after the American Petroleum Institute (API) on Tuesday estimated a 1 million barrel-decline.

Stocks of gasoline and diesel increased against expectations among analysts for a decline. "US inventory numbers from the EIA were more bearish than the API numbers from the previous day suggested," ING Economics said, noting the stocks totalled more than 500 million barrels for the first time this year.

"Refiners continue to bring back capacity after the freezing conditions in February," ING said.

On the demand front, a slowdown in some inoculation programmes and the prospect of more restrictions to control the coronavirus tempered expectations for a recovery in fuel use.

A number of European countries have halted use of AstraZeneca's Covid-19 vaccine because of concerns about possible side effects. Germany is also seeing a rise in coronavirus cases, while Italy plans a national lockdown for Easter lockdown and France will introduce tougher restrictions. REUTERS