Oil prices slumped on Wednesday as data showed a rise in U.S. crude and fuel stockpiles, raising the prospect of glut as a potential new wave of the coronavirus pandemic threatened to halt demand recovery
Brent crude futures fell by 22 cents or 0.54% to $40.74 a barrel at 10:34 West Africa Time while U.S. West Texas Intermediate (WTI) futures went down by 30 cents or 0.78% to $38.08 per barrel.
Nigeria’s banner oil grade, Bonny Light, climbed higher by $1.11 or 2.91% to $39.29 at the previous session. Qua Iboe, another major national grade, also advanced by $2.37 or 6.33% to $39.82 a barrel.
Brent and WTI gained more than 3% on Tuesday after the International Energy Agency (IEA) lifted its 2020 oil demand forecast to 91.7 million barrels per day (bpd) and U.S. retail sales recorded a record leap in May.
The rise in U.S. oil and fuel inventories, however, heightened worries about a surplus and pressured oil prices, as the number of coronavirus cases surpassed 8 million globally and many U.S. states saw their case numbers spike.
“API data showed a build in crude inventories, and rising new coronavirus cases in the United States and China have dampened expectations of improving fuel demand in the world’s top two oil consumers,” said Kim Kwang-rae, Commodity Analyst at Samsung Futures in Seoul.
Read also: Oil prices fall over worries of new wave of coronavirus, Bonny Light gains 0.03%
U.S. crude storage climbed by 3.9 million barrels in the week to 12th June to 543.2 million barrels according to data from industry group, the American Petroleum Institute, countering expectations for a decline of 152,000 barrels.
Gasoline stocks advanced by 4.3 million barrels and distillate fuels, which include diesel and heating oil, rose 919,000 barrels.
Official data from the U.S. Department of Energy’s Energy Information Administration is due later on Wednesday.
An OPEC-led panel will meet on Thursday to further discuss means of strengthening and reviewing compliance with producers’ commitment to rein in oil output.
Iraq slashed its oil exports by 8% or 300,000 bpd so far in June, implying that OPEC’s second biggest producer is firming up efforts to adhere to its pledged cut.
The Organisation of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, collectively known as OPEC+, agreed to cut output by 9.7 million bpd – about 10% of pre-pandemic demand – to the end of July.
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