Oil drops on demand recovery woes

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MELBOURNE- Oil prices fell more than 2 percent on Thursday on worries about slow demand growth with coronavirus cases rising, US crude stockpiles hitting an all-time high and the US Federal Reserve projecting recovery from the pandemic would take years.

US West Texas Intermediate (WTI) crude futures erased gains from Wednesday, falling as low as $38.42 a barrel. The benchmark contract was down 2.5 percent, or 99 cents, at $38.61.

Brent crude futures fell 2.2 percent, or 92 cents, to $40.81 a barrel, also giving up gains from Wednesday.

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US crude inventories rose unexpectedly by 5.7 million barrels in the week to June 5 to 538.1 million barrels – a record – as imports were boosted by the arrival of supplies bought by refiners when Saudi Arabia flooded the market in March and April, data from the Energy Information Administration showed.

At the same time, gasoline stockpiles grew more than expected to 258.7 million barrels. Distillate stockpiles, which include diesel and heating oil, rose by 1.6 million barrels, but the increase was smaller than in previous weeks.

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