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, Reuters reported.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading at $41.59 per barrel at 0340 GMT, down 34 cents, or 0.81%, from their last close, according to Reuters.
International Brent crude futures LCOc1 were trading at $43.89 per barrel, down 40 cents, or 0.90%.
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, according to the report.
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, according to Reuters.
Friday`s slump ended a mid-week rally driven in large part by those holding short positions booking profits from a more than 20% 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.