Oil prices fall amid demand recovery concerns, U.S. stockpiles see record growth

Oil prices fell more than 2% on Thursday on concerns over record stockpile growth among dwindling demand. Investor sentiment soured after the Federal Reserve estimated that recovery from the pandemic could take years.

Meanwhile, U.S. crude stockpiles grew unexpectedly by 5.7 million barrels, seeing a record 538.1 million barrels in a week towards June 5. According to data from the Energy Information Administration, the surge in inventory was attributed to supplies bought by refiners when Saudi Arabia swamped the market in March and April.

The U.S. Federal Reserve on Wednesday’s policy meeting forecasted a contraction of 6.5% in the world’s largest economy and a 9.3% unemployment rate by the end of the year.  

U.S. West Texas Intermediate (WTI) futures fell by 2.5% to $38.61 per barrel at 0211 GMT, losing gains made from a previous session on Wednesday. The benchmark even fell as low as $38.42 per barrel.

Brent crude futures lost 2.2% to $40.81 per barrel, also erasing gains from yesterday.

Gasoline stokpiles also grew to 258.7 million barrels. Distillate stockpiles such as diesel and heating oil increased by 1.6 million barrels, though the growth was lesser than the previous weeks.