(Bloomberg) — Oil slipped in early Asian trading after an industry report pointed to another increase in stockpiles, deepening a sell-off that has dragged prices back below $60 a barrel.
Futures in New York have slumped more than 12% in less than two weeks as a series of factors including softening demand, dollar strength and the unwinding of long positions hit the market. Adding to bearish sentiment are indications inventories continue to swell. The American Petroleum Institute reported crude stockpiles rose by almost 3 million barrels last week, people familiar said.
The bleak near-term outlook has also spread to the oil futures curve, which has collapsed into a structure that is signaling weakness. That comes as a string of renewed lockdown measures across Europe and rising coronavirus cases in other regions such as India weigh on the recovery.
The recent plunge in oil may put pressure on OPEC+ to do more to try and stem the slide, with the group meeting next week to decide on its production policy for May. Despite the decline, crude is still up almost 20% this year, and as Covid-19 vaccinations accelerate worldwide, there is confidence greater mobility will boost fuel consumption in the longer term.
The prompt timespread for global benchmark flipped to a bearish contango structure on Tuesday — where near-dated contracts are cheaper than later-dated ones. It was 7 cents in contango, compared with a bullish backwardation of 67 cents at the start of the month.
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