Oil prices fell on Friday, with prices heading for their biggest weekly decline since June, as weak demand and ample fuel supplies offset support from a weaker dollar. Brent crude fell 33 cents, or 0.8%, to $ 43.74 a barrel.
Brent has dropped 2.9% so far this week. US West Texas Intermediate (WTI) crude futures fell 35 cents, or 0.9%, to $ 41.02 a barrel. They were set for their first weekly decline in five weeks. It must be solved soon.
Both contracts look precarious now and will rely on strong (US) nonfarm payroll data tonight to save it. The abundant spot supplies and jittery equity markets will continue to erode confidence. That is why; oil prices are on their biggest weekly decline.
World’s Oil Forecast
The volume of crude oil arriving in China, the world's biggest crude importer, will slow in September. It was happened after rising for a fifth straight month as refiners gradually digest swelling inventories. That was known according to data at Refinitiv Eikon.
In the United States, refineries with diesel stocks are unlikely to increase production immediately. Soft margins are likely to limit further crude oil rallies and investors anticipate further declines this fall to accelerate the rebalancing of product stocks at the present time.
The production cut caused US gasoline inventories to fall at a "manic" pace in the past two months this year. It is although US mobility indicators suggest that the driving pattern has largely stabilized properly over the past 6 up to 8 weeks.
FGE analysts said the rise in coronavirus cases worldwide and the new lockdowns will dash hopes of pulling out oil stocks for some time. Besides that, the coronavirus is also still there. Pressure remains on the refiner to keep operating rates low, says FGE.
Market Concerns about Unemployment
US unemployment data has made the market worried that the economic recovery will run slowly, which will affect oil demand. The world crude oil price continued to decline until it touched its lowest level since August. It was triggered by the increase in US unemployment data.
This situation made the market worried that the economic recovery would be slow and it would affect oil demand. On Thursday (3/9) the price of Brent oil futures for November delivery fell 36 cents, or 0.8%, to the level of 44.07 US dollars per barrel.
Meanwhile, West Texas Intermediate (WTI) also fell 0.3%, ending at $ 41.37 per barrel. Quoting Bloomberg, on Friday (4/9), the price of Brent oil for the November 2020 delivery contract was still down 0.61% to the US $ 43.80 per barrel.
The reference price for these two oils fell more than 2% after data from the US Energy Information Administration (EIA) showed that domestic fuel demand last week. The data shows that it fell to 8.78 million barrels per day (BPD) from 9.16 million BPD.
Refinery Maintenance Must Be Done
This decline was also followed by the consumption of oil products. Analysts warned that upcoming refinery maintenance and late summer could limit demand for crude. WTI crude is under pressure after US refiners announce a long list of maintenance closes for the coming months impacting crude demand.
As a result of the closure of the refinery during Hurricane Laura, the US refinery utilization rate fell 5.3 points to 76.7% of the total capacity. Some analysts believe processing will not recover in the fall. It is quite difficult to be realized.
Refineries that operate at low prices will leave a lot of crude oil left behind. The crude oil is stored. Bloated storage has finally put pressure on prices. The Covid-19 pandemic has given uncertainty to oil demand and make the price is always fluctuating.
