Oil Snaps 5-Day Rally With Supply Glut Eclipsing Demand Recovery - Bloomberg

Oil Snaps 5-Day Rally With Supply Glut Eclipsing Demand Recovery - Bloomberg:

Oil snapped a five-day rally as a persistent supply glut outweighed signs of recovering U.S. fuel demand.

Futures in New York fell 2.3% Wednesday, after doubling in value from a week ago. American gasoline consumption on a four-week basis rebounded at its strongest rate on record last week but remained far below the seasonal average, according to the Energy Information Administration. At the same time, crude stockpiles increased by 4.59 million barrels, and total petroleum inventories rose to the highest level ever, sustaining concerns about storage capacity.

“We will continue to have oversupply and slow demand for a while yet,” said Bart Melek, head of commodity strategy at Toronto Dominion Bank. “I don’t expect prices to go much higher above the current $23.50, and there is downside risk in the near-term.” In addition, an armada of oil tankers carrying Saudi oil to the U.S. could further test storage and force prices below $20 again, he said.

PRICES:
West Texas Intermediate fell 57 cents to settle at $23.99 a barrel in New York. Brent declined $1.25 to settle at $29.72 a barrel.