Crude-oil futures tumbled Thursday morning, putting both benchmark grades on pace to fall by the most in more than six weeks, as a report on rising U.S. inventories, evidence of climbing cases of coronavirus, and a gloomy economic outlook from the Federal Reserve combined to undermine the recovery from historic lows seen in April.
“Oil prices have mostly retreated today after the EIA reported that US crude inventories expanded to an all-time high,” wrote Paola Rodriguez Masiu, senior oil markets analyst at Rystad Energy, in a Thursday note.
Indeed, the Energy Information Administration reported Wednesday that U.S. crude inventories rose by 5.7 million barrels for the week ended June 5. That defied a forecast by analysts polled by S&P Global Platts for an average decline of 3.2 million barrels.
Meanwhile, Fed Chairman Jerome Powell on Wednesday emphasized that the economic outlook for the U.S. would be challenging as the central bank kept rates at a range of 0% and 0.25% following its policy meeting and warned that millions of people might not return to their jobs.
“In the last weeks, oil prices have rallied on the back of supply curtailments that have largely brought global crude inventories under control, but prices are once again under pressure as concerns over the pace of the demand recovery intensified,” the Rystad analyst wrote.
A weaker recovery from the pandemic that has hobbled much of the global economy can damage demand for crude oil and its byproducts as the industry struggles with concerns about the efficacy of measures to limit oil output.
Hot damn! More "cheap" gas.
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