[BREAKING] Oil Price Dragged by Weak Demand Outlook From U.S. Gasoline Stocks Up

Illustration photo of oil well from Daily FX

MELBOURNE (Reuters) - Oil prices dropped in early trade on Thursday, adding to heavy losses overnight, after a build in U.S. gasoline inventories pointed to a deteriorating outlook for fuel demand as coronavirus cases soar in North America and Europe.

U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 27 cents, or 0.7%, to $39.76 a barrel at 0127 GMT, after skidding 4% on Wednesday.

Brent crude LCOc1 futures retreated 21 cents, or 0.5%, to $41.52 a barrel after sliding 3.3% on Wednesday.

U.S. gasoline stocks USOILG=ECI rose by 1.9 million barrels in the week to Oct 16, the Energy Information Administration (EIA) said, compared with expectations for a 1.8 million-barrel drop.

Overall product supplied, a proxy for demand, averaged 18.3 million barrels per day in the four weeks to Oct 16, the EIA said - down 13% from the same period a year earlier.

“The latest EIA report showed an unexpected increase in gasoline inventories, which came at the same time as reduced gasoline output because of refinery outages due to Hurricane Delta. So the implication is gasoline demand is pretty soft,” said Lachlan Shaw, head of commodity research at National Australia Bank.

“The resurgence in coronavirus cases is seeing the U.S. motorist increasingly putting the brakes on. This makes the negotiations on a U.S. stimulus package even more important,” ANZ Research said in a note.

NAB’s Shaw said even if a COVID-19 relief package was approved, it would likely give oil prices only a temporary lift.

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