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Riku Tanaka
in
Futures
April 16 21:43

Brent drops, WTI jumps

As US reserves reaching record high, West Texas Intermediate (WTI) dropped on Wednesday (Apr 15) to its lowest mark since over 18 years, with Brent plummeting by 6%.
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Oil prices were steady across the board on Thursday (Apr 16) after some abrupt drops in the yesterday's session (Apr 15), with traders trusting that a major accumulation in US reserves may give major producers few choices except to extend yield reductions as the COVID-19 crisis desolates demand.  

As US reserves reaching record high, according to official data, West Texas Intermediate (WTI) dropped on Wednesday (Apr 15) to its lowest mark since over 18 years, with Brent plummeting 6%.
Brent crude was down US$0.19, or 0.7%, at US$27.50 a barrel by 0754 GMT, while WTI was up by US$0.07, or 0.4%, at US$19.94.
Brent was set on a course toward its third consecutive session of losses, while WTI barely squeezed out its first provisional gain in the wake of dropping for four days straight.
Worries over disintegrating demand kept growth in check, with the two contracts exchanging as much as 2.5% more, earlier in today’s session yesterday's (Apr 15).
Data from the EIA indicated huge US refined fuel reserve build-up even though refineries are working at almost 70% of their capacity across the country, a record low in over a decade.
"The massive storage build, as counterintuitive as it sounds, did provide some price support as the build foreshadows that more wellhead closures are just around the corner, which effectively trims U.S. supply," said Stephen Innes, chief global markets strategist at AxiCorp.
The numbers came after the EIA report predicted that oil demand would plummet by 29 bpd this month, the lowest it’s been in a quarter-century.
The anticipated reduction in demand is definitely higher than the output reductions that were agreed upon by top producers, or OPEC+, who have cut a deal to drop production by 9.7 million bpd.
Long-awaited reductions of an additional 10 million bpd from other nations, including the US, could bring down the total oil output by 20 million bpd, albeit a number of specialists have criticized this figure.
"Given the scale of demand destruction this quarter, OPEC+ cuts will fall short of bringing the market to balance anytime soon, and this is reflected in the price weakness seen since the OPEC+ deal," ING bank said in a note on Thursday (Apr 16).
A few nations have also agreed to expanding acquisition of oil for their strategic reserves, yet there is only so much oil that can be purchased for such purposes and a limit of global coordination.