An oil tanker is loaded in Saudi Arabia. Picture: REUTERS
An oil tanker is loaded in Saudi Arabia. Picture: REUTERS

Tokyo — Oil prices slumped to their lowest level in two weeks after official figures showed a surprise jump in US inventories of crude, and rising cases of Covid-19 in Europe, Russia and some outbreaks of infections in China dented hopes for an economic recovery.

Brent crude dropped $1.58, or 1.9%, to $83.00 a barrel by 5.02am GMT, having hit a two-week low of $82.32 earlier and fallen by 2.1% in the previous session.

US oil fell $1.39, or 1.7%, to $81.27 a barrel, also a one-week low, after dropping 2.4% on Wednesday.

Outbreaks of coronavirus infections in China and record deaths and the threat of lockdowns in Russia, along with rising cases in Western Europe, were putting the brakes on a multiweek rally in oil prices.

“A surge in new cases of Covid-19 threatens to disrupt the recovery in oil demand,” ANZ Research commodities strategists Daniel Hynes and Soni Kumari said in a new report on Thursday.

In the US, the economy likely grew at the slowest rate in more than 12 months in the June-September quarter amid a resurgence of Covid-19 infections, amid strained global supply chains and global shortages of goods such as cars.

Crude stocks rose by 4.3-million barrels last week, the US energy department said, more than double the 1.9-million-barrel gain forecast by analysts.

The “hefty” stock build came “on the back of a large jump in net imports of crude oil and still sluggish refinery processing”, Citi Research commodities analysts said in a note.

Still, petrol stocks fell by 2-million barrels to the lowest in nearly four years, even as US consumers struggle with rising prices to fill their tanks.

At the West Texas Intermediate delivery hub in Cushing, Oklahoma, crude storage is the most depleted in three years, with prices for longer-dated futures contracts indicating supplies will stay low for months.

Reuters

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