Oil remained bearish on Thursday morning in Asia as the U.S. reported record inventories, while demand continues to be threatened by economic slowdown and trade disputes.
U.S. Crude Oil WTI Futures were at $51.85 per barrel at 1:26 AM ET (05:26 GMT) after dipping to $51.31 earlier on Thursday.
Brent Oil Futures, the international benchmark for oil prices, had tumbled below the $60 mark in the previous session. They were at $60.84, recovering slightly by 0.29%.
WTI and Brent hit their lowest levels since January after a surge in U.S. crude inventories.
U.S. crude oil production rose to a record 124.4 million barrels per day (bpd) in the week to May 31, said the Energy Information Administration (EIA), which also showed that inventories increased by 6.771 million barrels in the week to May 31, compared with forecasts for a stockpile draw of 0.85 million barrels.
According to the EIA, U.S. crude oil refinery inputs averaged 16.9 million bpd during the week ending May 31, which was 171,000 bpd more than the previous week’s average.
“I wouldn’t be surprised to see a real meltdown in the prices today,” Matt Sallee, a portfolio manager at Tortoise Capital Advisors LLC, told Bloomberg by phone. “Until something changes the mood, which maybe would be a breakthrough in trade, I don’t see any reason crude is going to improve over the next week.”
The Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated producers including Russia, have been curbing oil supply since the start of the year to shore up the market. The group will decide later this month or in early July whether to continue withholding production.
Meanwhile, oil demand is also facing pressure from slowing economic growth and trade tensions.
“Recent data suggests the nascent recovery has stalled amid trade tensions and a double dip is likely,” Reuters quoted investment bank Morgan Stanley (NYSE:MS) who also expects to see “the lowest growth rate since the global financial crisis” of 2008/2009.