Oil headed for its first back-to-back weekly losses since April’s price rout, driven by a sharp slump in risk sentiment earlier in the week and a patchy demand recovery.
Futures in London fluctuated around $40 a barrel on Friday, down about 6% for the week. U.S. crude inventories rose, with stockpiles at the Cushing storage hub reaching the highest since May, according to Energy Information Administration data on Thursday.
While the recovery in road-fuel demand is gaining speed in Asia and Europe, American figures continue to lag.
With a mixed demand picture and the OPEC+ alliance gradually adding more supply, some market players are considering storing crude at sea again.
There’s been a chorus of bleaker views on consumption this week, with S&P Global Platts saying oil demand is unlikely to get back to 2019 levels before 2022. A retreat in global stocks has also weighed on energy markets.
“The financial markets are continuing to set the tone, including on the oil market,” said Eugen Weinberg, head of commodities strategy at Commerzbank AG. “Fears about an oversupply have added to the general feeling of uncertainty.”
Brent for November settlement slipped 0.1% to $40.01 a barrel at 10:31 a.m. in London
West Texas Intermediate for October rose 4 cents to $37.34
On Thursday, Brent for December settled at its biggest discount to year-ahead futures since May. That structure, known as contango, indicates growing market concern about oversupply and boosts the profitability of storing oil at sea.
In recent days, several supertankers have been chartered that could be used for floating storage or for transport, according to shipbrokers and fixtures.
Oil options markets have also turned progressively more bearish this week. Early on Friday, the cost of bearish put options, which help traders profit when prices slide, was the most expensive relative to bullish calls since June. That suggests options traders remain pessimistic about the market outlook.