LONDON (Reuters) - Oil prices fell further on Friday and were on track for a second weekly drop after U.S. stock markets tumbled and U.S. stockpiles rose unexpectedly.
Both benchmarks were 6% down for the week.
“Financial markets are continuing to set the tone, including on the oil market. The renewed slide on U.S. stock markets dragged oil prices down with it,” Commerzbank analyst Eugen Weinberg said.
The three main U.S. stock indexes were headed for a second straight weekly decline as recent economic indicators suggest a long and difficult recovery from the pandemic.
“Stock markets dived, oil followed, and Brent lost 15% of its value in five trading sessions as money managers liquidated,” oil broker PVM’s Tamas Varga said.
Also dampening the market mood, the U.S. Senate killed a Republican bill that would have provided around $300 billion in new coronavirus aid.
Fears about an oversupply also added to the general feeling of uncertainty, Weinberg said.
In the United States, stockpiles rose last week, against expectations, as refineries slowly returned to operations after production sites were shut down due to storms in the Gulf of Mexico and the wider region.
U.S. crude inventories rose 2 million barrels, compared with forecasts for a 1.3 million-barrel decrease in a Reuters poll. [EIA/S] [ENERGYUSA]
In a further bearish sign, traders were starting to book tankers again to store crude oil and diesel, amid a stalled economic recovery as the COVID-19 pandemic continues.
Graphic: Oil Product Floating Storage in Europe -
Increasing stockpiles are likely to be a subject at a meeting on Sept. 17 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia.
The group known as OPEC+ has been withholding supply to reduce stockpiles, but analysts say the meeting is likely to focus on compliance among members, rather than seek deeper cuts.
Following Saudi Arabia, Kuwait also lowered its official selling price to Asia for October, to counter slower demand.
(Story corrects Brent price to $39.78 (not $30.78), paragraph 2)
Reporting by Bozorgmehr Sharafedin in London and Aaron Sheldrick in Tokyo; Editing by Susan Fenton and David Evans
Our Standards: The Thomson Reuters Trust Principles.