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Major trading firms like Mercuria and Trafigura expect oil inventory buildup to persist on weak demand. 

Marco Dunand, chief executive of Mercuria Energy Trading, told Reuters that financial investors are buying futures contracts expiring in the second half of 2021 or December 2021 on the assumption that demand will slow recovery by then. 

However, that looks unlikely. Markets were expecting a daily draw of three to four million barrels per day while coming into the fourth quarter of 2020. “However, the market is not drawing that,” said Dunand, and added that, “Crude and distillate stocks, in particular, are building, it’s a bubble mess.”

Meanwhile, Saad Rahim, chief economist at trading house Trafigura, said refinery runs aren’t going to continue recovering and could pose a risk to crude.