On Wednesday, oil prices went down following the report of US oil inventory builds, aggravating concerns over a global supply glut.
As of 00.35 GMT, Brent crude oil futures for December delivery slipped by 0.5% or 22 cents to USD42.94/barrel while US WTI for December also edged down by 0.7% or 23 cents to USD41.47/barrel. In the previous sessions, both benchmarks gained.
Data from the industry group the American Petroleum Institute (API) showed that last week, crude inventories climbed by 584,000 barrels to around 490.6 million barrels, contrasting with analysts’ expectations for a 1 million barrels drop.
Further weighing down prices was the global coronavirus cases which hit 40 million on Tuesday, casting a dark cloud over the demand outlook moreover when some parts of Europe imposing renewed lockdown measures.
The supply side also does not provide hope for prices.
The Organization of the Petroleum Exporting Countries and its non-member oil producer allies (OPEC+) will ease its output cut pact to 5.7 million bpd starting January from the current 7.7 million bpd.
Moreover, OPEC member Libya, which has been exempted from the output cut pact, is ramping up output after the production bans were partially lifted.
Looking ahead, analyst Satoru Yoshida of Rakuten Securities estimated that oil prices would still see some challenges. Expectations for coronavirus-related economic stimulus in the US and other countries would likely support consumption and cap losses. However, OPEC+ plan to ease output cuts would also limit any future gains.
On Tuesday, the US is moving closer to the agreement on a new coronavirus relief package.
