Oil Continues to Decline Amid Rising Inventories and Weak Demand

Oil prices fell for a second day, as a sudden increase in US crude stocks negatively affected the sentiment, which is already suffering in light of the erosion of fuel demand with the continuing Corona pandemic.

Brent crude fell 15 cents, or 0.4%, to $ 39.91 a barrel ahead of the opening of European markets, after dropping about 2% on Thursday, while US crude fell seven cents, or 0.2%, to $ 37.23 a barrel, after dropping 2% in the Previous session.

The two benchmarks are down by more than 6% each this week and are heading towards the second week of losses, as hopes for a regular recovery of fuel demand dwindle in light of signs of a second wave of the Coronavirus outbreak.

In the United States, stocks rose last week, against expectations, as refineries slowly reverted to operations after production sites were closed due to storms in the Gulf of Mexico and a wider region.

Crude inventories in the United States rose by 2 million barrels, compared with expectations of a decrease of 1.3 million barrels.

In another negative sign, dealers have begun to book tankers to store crude oil and diesel, in light of the faltering economic recovery as the Covid-19 pandemic continues unabated.

The issue of the stockpile will likely come up at a September 17 meeting of the Market Watch Committee of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, in the group known as OPEC +.

The group is restricting supplies to reduce stocks, but analysts say the meeting will likely focus on compliance by members rather than seeking deeper cuts.