Oil fell quite 1 percent towards $40 a barrel on Wednesday after a report showed an increase. In crude inventories within the US. Reviving concerns about oversupply and weak demand thanks to the coronavirus crisis.
The report from the American Petroleum Institute, an industry group, said crude stocks rose by 8.4 million barrels, instead of falling as analysts forecast.
The US government’s official stocks
Brent crude fell 70 cents, or 1.7 percent, to $40.48 a barrel by 0820 GMT. US West Texas Intermediate (WTI) dropped 98 cents, or 2.5 percent, to $37.96.
Both benchmarks had hit three-month highs on Monday. Brent has quite doubled since falling to a 21-year low below $16 in April. But some analysts think the market has risen too far because the coronavirus pandemic continues.
“With equity markets edging lower, and a huge amount of excellent news baked into oil prices at these levels. It had been no surprise that the oil market’s confidence wavered slightly,” said Jeffrey Halley, senior analyst at OANDA.
“That wasn’t helped by a blowout rise in US API crude inventories,” he added.
Official government figures on US stockpiles from the Energy Information Administration are due afterward Wednesday.
Prices are supported by a record oil supply cut of 9.7 million barrels per day (BPD). About 10 percent of pre-coronavirus daily demand. By the Organization of the Petroleum Exporting Countries (OPEC), Russia et al. , a gaggle referred to as OPEC+.
A gradual easing of state lockdowns that sought to limit the spread of the virus has revived demand by boosting travel and economic activity, also supporting the market.
OPEC+ agreed on Saturday to increase the record cut for an additional month. Until the top of July to bolster efforts to clear the glut and to spice up patchy compliance with the reduction.
While this helped prices, the market came struggling after Saudi Arabia, Kuwait, and therefore the United Arab Emirates decided to not extend their extra voluntary supply reductions.