MELBOURNE/SINGAPORE- Oil prices dropped in early trade on Thursday, adding to heavy losses overnight, after a build in US gasoline inventories pointed to a deteriorating outlook for fuel demand as coronavirus cases soar in North America and Europe.
Brent crude futures retreated 22 cents, or 0.5 percent, to $41.51 a barrel after sliding 3.3 percent on Wednesday.
US West Texas Intermediate (WTI) crude futures fell 26 cents, or 0.7 percent, to $39.77 a barrel, after skidding 4 percent on Wednesday.
US gasoline stocks 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 percent 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.
With new daily COVID-19 infections hitting records in several US states and in Europe, new lockdowns and China’s clampdown on outbound travel to help stem the spread of the disease bode ill for fuel demand.
Worsening the outlook, hopes that US lawmakers would reach an agreement with the White House on an economic stimulus package dimmed late on Wednesday after President Donald Trump accused Democrats of holding up a compromise deal.