Oil prices continued to soften on Wednesday as the surprising increase in U.S. crude oil stocks raised concerns over global supply abundance, as the rise in global COVID-19 cases fueled fears of a recovery in fuel demand.
Brent crude futures for December delivery were at $42.93 a barrel, down 23 cents, or 0.5%, as of 0332 GMT, while December West Texas Intermediate (WTI) crude futures slipped 20 cents, or 0.5%, to $41.50 a barrel.
Both benchmarks rose in the previous session.
Worldwide COVID-19 cases exceeded 40 million on Tuesday, and parts of Europe have implemented renewed lockdown measures. With the recent resurgence of its cases, the US inventory structure has prompted investors to make position adjustments.
Crude oil stocks increased by 584,000 barrels in the week of October 16 to around 490.6 million barrels, compared to analysts’ expectations of a contraction of 1 million barrels.
On the supply side, Russia’s energy minister said on Tuesday that it is too early to talk about the future of global oil production restrictions beyond December, after she said plans to reduce current production restrictions should continue.
OPEC and its allies, including Russia, had been agreed on reducing their daily production cuts of 7.7 million barrels to 5.7 million barrels a day in January.
However, OPEC member Libya, which is exempt from cuts, is increasing production and pumping more oil into a market suffering from oversupply.
Meanwhile, oil price gets some support from the US. There is positive news that the president is willing and an agreement is approaching on a new coronavirus aid package that could increase fuel demand.