Crude prices sag as short-covering surge fizzles
On Friday, crude prices dropped because a crude and refined product oversupply weighed on financial markets and traders considered a probable stutter in Chinese imports, concluding a two-day short-covering soar.
US West Texas Intermediate crude futures were worth $41.59 per barrel, showing a 0.81% drop. Meanwhile, international Brent crude futures slumped 0.9%, trading at $43.89 per barrel.
Financial analysts point out that crude markets are currently under renewed pressure from overproduction in crude as well as refined products, which has left onshore storage tanks filled to the rims and also triggered the chartering of tankers to store unsold stuff.
On the demand side, BMI Research reported that Chinese imports were heading south from records set in 2015 and also this year.
Apart from that, Chinese near-term crude imports will most likely remain sluggish because of a combination of factors, such as brimming commercial fuel stockpiles, a more gradual pace of strategic stock building and a slower off-take growth among teapots.