Oil slides on surprise U.S. inventory build, demand worries rise
Oil prices dropped on Wednesday as a sudden rise in U.S. crude stocks added to fears about a global supply glut. Demand worries were also reignited by a surge in global coronavirus cases and a production rise in Libya.
Brent crude futures for December contract fell 0.5%, or 22 cents, at $42.94 per barrel. U.S. West Texas Intermediate crude futures for December were down 0.7%, or 23 cents, at $41.47 per barrel. Both contracts rose in the last session.
U.S. crude stocks climbed by 584,000 barrels to 490.6 million barrels in the week ended Oct. 16, contrary to analysts’ expectations for a 1 million barrel drawdown.
Also weighing on prices are global COVID-19 cases which surpassed 40 million on Tuesday. Parts of Europe have reimposed lockdown measures.
Meanwhile, OPEC and its allies are sticking with the current 7.7 million bpd cut through December. However, this will be slashed down to 5.7 million bpd in January.
OPEC producer Libya, which is exempt from the cuts, is increasing output following an armed conflict that shut the country’s oil production.