MOSCOW (MRC) -- Oil prices extended losses, falling by more than 2% to their lowest point since early August, as worries about weaker US gasoline demand and a sluggish economic recovery from the COVID-19 pandemic dented sentiment, reported Reuters.
Brent crude LCOc1 fell USD1, or 2.25%, to USD43.43 a barrel by 1118 GMT. US West Texas Intermediate (WTI) crude CLc1 futures were down USD1.02, or 2.5%, at USD40.49 a barrel.
Both benchmarks fell more than 2% on Wednesday.
US gasoline demand last week fell to 8.78 million barrels per day (bpd) from 9.16 million bpd a week earlier, Energy Information Administration (EIA) data showed on Wednesday, with consumption of other oil products also falling.
“It is the latest data set that possibly caught the eye of those who ran long positions, and not even another record close in the US stock market was able to change the direction of the herd,” Tamas Varga of oil brokerage PVM said.
Other data, such as US private employers hiring fewer workers than expected for a second straight month in August, also fed fears that economic recovery was lagging.
Oil markets, however, drew some support from Iraq’s denial it was seeking exemption from OPEC+ oil cuts during the first quarter of next year.
OPEC’s second largest producer also said it may seek to extend by two months until the end of November the period for making additional compensation cuts under the OPEC+ deal.
Analysts warn that the upcoming refinery maintenance and the end of the summer driving season would also limit crude demand.
WTI crude has come under pressure “after US refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil”, ANZ Research said in a note on Thursday.
Due to shutdowns ahead of Hurricane Laura, US refinery utilization rates fell by 5.3 percentage points to 76.7% of total capacity, the EIA said.
“These factors suggest a seasonal drop-off in refinery runs and higher oil inventory levels as we advance through September,” AxiCorp market strategist Stephen Innes said.
As MRC informed earlier, most chemical production facilities in the region between Beaumont-Port Arthur, Texas, and Lake Charles, Louisiana, have shut down in preparation for Hurricane Laura, which was forecast to make landfall near the Texas-Louisiana border last Wednesday night or early Thursday. Several olefin crackers and associated derivative polymer units have been shut down, as has about 2.5 million b/d of refining capacity.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and PP.
According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.