Oil prices slide on concerns about patchy demand recovery, record U.S. stocks

By Sonali Paul
MELBOURNE, June 11 (Reuters) - Oil prices fell in early
trade on Thursday on worries about slow demand growth with
coronavirus cases rising, U.S. crude stockpiles hitting an
all-time high and the U.S. Federal Reserve projecting recovery
from the pandemic would take years.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
erased gains from Wednesday, falling as low as $38.42 a barrel.
The benchmark contract was down 2.2%, or 86 cents, at $38.74 at
0031 GMT.
Brent crude LCOc1 futures fell 2.0%, or 85 cents, to
$40.88 a barrel, also giving up gains from Wednesday.
Analysts said following a doubling in prices since April,
traders were selling into any negative news.
"The recent rally in crude oil prices stalled as rising
inventories showed the path to a recovery will be a rocky one,"
ANZ analysts said in a note.
U.S. crude inventories rose unexpectedly by 5.7 million
barrels in the week to June 5 to 538.1 million barrels - a
record - as imports were boosted by the arrival of supplies
bought by refiners when Saudi Arabia flooded the market in March
and April, data from the Energy Information Administration
showed. At the same time, gasoline stockpiles grew more than
expected to 258.7 million barrels. Distillate stockpiles, which
include diesel and heating oil, rose by 1.6 million barrels, but
the increase was smaller than in previous weeks. Adding to the negative sentiment, the U.S. Federal Reserve
said the world's largest economy would shrink 6.5% this year and
the unemployment rate would be at 9.3% at the end of 2020 in its
first projections of the pandemic era. "Short-term and fast money traders are very much inclined to
sell outright or to take profits on any hint of bearish data,"
said Stephen Innes, chief global market strategist at Axicorp.
In a further sign that recovery will continued to be
overshadowed by the coronavirus, total U.S. cases topped 2
million on Wednesday, with new infections rising slightly after
five weeks of declines, according to a Reuters analysis.