0220 GMT: Crude oil futures were trading lower in mid-morning trade in Asia June 11 as data indicating record-high US commercial inventories raised concerns of oversupply amid tepid demand recovery indications.
At 10:20 am Singapore time, ICE Brent August crude futures was 93 cents/b (2.23%) lower from the settle on June 10 at $40.80/b, while the NYMEX July light sweet crude contract was $1.02/b (2.58%) lower at $38.58/b
"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 June 11 note.
US commercial crude stocks surged 5.72 million barrels to 538.07 million barrels during the week ended June 5, according to US Energy Information Administration data released June 10.
The build pushed stocks to 13.5% above the five-year average and put commercial inventories at the highest on record dating back to 1982.
"Brent may look to trade between $40-$42/b for now until a clearer catalyst emerges," OCBC analysts said in a June 11 note.
Rising inventories of gasoline and distillate fuel also raised concerns about demand recovery.
Nationwide distillate inventories climbed 1.57 million barrels to 175.83 million barrels last week, putting them nearly 20% above the five-year average, the data from EIA showed.
Meanwhile, recent customs data showed that China's crude imports hit an all-time high of 11.37 million b/d in May, but uncertainty revolved around whether the trend is sustainable now that the Brent price is above the $40/b mark.
"In oil it reflects the incentives created by the government policy of flooring petroleum prices when crude falls below $40/b, creating an import binge during May despite oil demand having not fully recovered," Goldman Sachs analysts said in a note earlier in the week starting June 8.
"Now oil is above $40/b this incentive to import crude oil has diminished," they added.
