However, traffic jams have resumed in Europe and Asia: File Iamge/PixaBay
The schizophrenic trading pattern in the crude sector continued on Thursday thanks to a surprise build in U.S. stockpiles last week - which in turn rekindled fears that demand recovery has stalled.
The Energy Information Administration said crude inventories rose 2.0 million barrels last week compared to a poll forecasting a 1.3-million barrel draw, surprising considering that much of the Gulf of Mexico production has not yet returned in the wake of Hurricane Laura.
Accordingly, Brent on Thursday fell 25 cents to $40.54 per barrel, and West Texas Intermediate fell 75 cents to settle at $37.30 per barrel.
The OPEC+ leadership will continue to direct its efforts towards securing better compliance
Not helping the bearish sentiment was Bank ANZ reporting that oil imports in China would likely level off as independent producers reached their maximum quotas, and leading commodity traders - including Trafigura - said to be booking tankers to store millions of barrels of crude oil and diesel at sea again.
The most imminent stopgap to the downward spiral in prices is thought to be the Organization of the Petroleum Exporting Countries (OPEC), whose market monitoring panel will meet on September 17 to assess its output cuts in relation to global supply and demand.
RBC analysts said, “Despite the recent slide in oil prices, we think that the OPEC+ leadership will continue to direct its efforts towards securing better compliance rather than pushing for deeper cuts at this stage.”
However, business prospects continue even in an economy ruined by government-imposed Covid lockdowns, case in point: next May is the expected start of the $3.5 billion East Africa Crude Oil Pipeline by Total and partner China National Offshore Oil Corporation.
Also, European oil majors including BP made headlines on Thursday for snapping up offshore wind developments in a bid to curb fossil fuel dependence and reach their climate goals (BP's deal with Norway's Equinor was valued at $1.1 billion).
Meanwhile in Russia, Rosneft on Thursday announced it had started to drill an exploration well at the hard-to-recover Domanik formation in the region of Orenburg, near the Kazakhstan border - its first such project without any partner.
It's also worth noting that while the Americas remain mired in economic challenges due to the government lockdowns, Bloomberg on Thursday reported that rush-hour traffic jam has returned full force to Europe and Asia, with London alone experiencing its heaviest jams in more than six months on Wednesday (with congestion 8 percent above the average 2019 level).
As for the Covid vaccines that will further propel the world back to normal, AstraZeneca, which temporarily halted its late stage trials after an illness in a participant, said it should still know by year-end if its vaccine will help put an end to the pandemic (the company is close to having capacity to produce 3 billion doses at sites set up around the globe).
Also, health experts on Thursday said it's increasingly likely that several vaccines could pass muster in clinical trials and become available in phases over a period of weeks and months, starting as soon as this fall.