Oil prices weakened on Wednesday, with industry figures of growth in United States’ crude stockpiles confounding analysts’ expectation and a dramatic increase in the country’s coronavirus cases threatening fuel demand.
Contrary to analysts’ forecast of 2.1 million barrels, U.S. oil storage rocketed by 7.5 million barrels last week, the American Petroleum Institute (API) reported.
The U.S Energy Information Administration (EIA) will issue official oil data later on Wednesday.
Stephen Brennock of oil broker PVM said “U.S. glut fears have become a permanent fixture of the oil market.”
“This will remain the case so long as the U.S. oil demand outlook is being undermined by the country’s failure to contain the COVID-19 pandemic.”
Coronavirus cases across the world climbed past the 15 million mark on Wednesday according to a Reuters aggregate as the virus rage further and nations remain divided in their response to the crisis.
U.S. President Donald Trump, in his first COVID-19 press meeting in months, said the pandemic would possible escalate before getting better.
His remarks were a departure from his earlier passionate stance on restarting the world’s biggest economy.
Nevertheless, the market might soon hold on to Trump’s words, considering that it was one of the administration’s most reasonable announcements on the outbreak, Rystad Energy’s Oil Markets Head, Bjornar Tonhaugen said.
“This could be a positive for oil demand prospects. Instead of an uncontrolled, disruptive second wave of lockdowns, maybe chances have now increased that the United States will eventually get the spread under control.”
Democrats and Republicans are also striving to unite over bigger fiscal support for the economy in contrast to the European Union pact that raised oil prices on Tuesday.
The U.S.-China divide over the pandemic outbreak and Hong Kong also depressed oil prices.
China said it had been suddenly ordered by the U.S. to close its consulate in Houston, a decision China said it strongly disapproved, threatening vengeance.
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