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June 24, 2021
Business International

Oil prices fall as short-covering rally fizzles, oversupply weighs

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Image: A worker walks at Nahr Bin Umar oil field, north of Basra, Iraq December 21, 2015. REUTERS/Essam Al-Sudani

By Henning Gloystein

SINGAPORE (Reuters) – Oil prices fell on Friday as a crude and refined product glut weighed on markets and investors eyed a possible stutter in China’s imports, ending a two-day short-covering rally.

U.S. West Texas Intermediate (WTI) crude futures were trading at $41.59 per barrel at 0340 GMT, down 34 cents, or 0.81 percent, from their last close.

International Brent crude futures were trading at $43.89 per barrel, down 40 cents, or 0.90 percent.

Traders said oil markets came under renewed pressure from overproduction in crude and refined products that has left onshore storage tanks filled to the rims and triggered the chartering of tankers to store unsold fuel.

On the demand side, BMI Research said China’s imports were weakening from records set in 2015 and this year.

“China’s near-term crude imports will remain sluggish due to a combination of factors including brimming commercial fuel stockpiles, slower off-take growth among teapots (refiners) and a more gradual pace of strategic stock building,” BMI said.

Friday’s slump ended a mid-week rally driven in large part by those holding short positions booking profits from a more than 20 percent fall in oil prices between June and early August, traders said.

“Oil prices rallied (Wednesday and Thursday) despite little fundamental data. However, with CFTC data showing investors increased their shorts positions the most ever for the week ending 26 July, this suggests a short covering rally,” ANZ bank said on Friday.

In oil market news, Yahoo’s standalone messenger software, the main tool used by traders to communicate since the late 1990s, is due to shut down on Friday, leaving market participants with a fragmented choice of alternatives, including Eikon Messenger, ICE Instant Messaging, Symphony, Bloomberg Messenger, Twitter and WhatsApp.

Also, in pricing and analytics, leading commodity price reporting agency S&P Global Platts has signed an agreement to acquire global energy market analysis firm PIRA Energy Group.

(Reporting by Henning Gloystein; Editing by Richard Pullin and Tom Hogue)

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