Oil prices came under pressure on Wednesday after inventory data from an industry trade group pointed to a surge in domestic U.S. crude supplies, and concerns over rising coronavirus cases worldwide scared investors away from perceived riskier assets such as commodities.
That appeared to outweigh a near-term drop in crude output in the Gulf of Mexico as Hurricane Zeta approached landfall on the Gulf Coast.
December West Texas Intermediate crude CLZ20, -4.80% fell $1.91, or 4.8%, to $37.66 a barrel, after the contract settled up 2.6% to $39.57 on the New York Mercantile Exchange Tuesday. December Brent crude BRN00, -3.96% slid $1.65, or 4%, to $39.96 a barrel on ICE Futures Europe, after closing up 1.8% to $41.20 on Tuesday.
“Elevated U.S. crude inventories coupled with soaring coronavirus infections in the U.S. and Europe hitting the demand outlook have prompted fresh selling in oil and the bears to take back control,” said Fiona Cincotta, analyst at City Indes, in a note.
The threat of national lockdowns in Germany and France and a continued rise in COVID-19 cases in the U.S. underlined concerns over the demand outlook. Equity markets were under heavy pressure on fears the renewed rise in the spread of the virus would threaten the economic recovery.
Meanwhile, the American Petroleum Institute late Tuesday reported that U.S. crude supplies rose nearly 4.6 million barrels for the week ended Oct. 23, according to sources. Gasoline stockpiles jumped by nearly 2.3 million barrels, while distillate inventories fell 5.3 million barrels.
More closely followed inventory data from the Energy Information Administration is ahead for Wednesday, and expected to show crude inventories up by 200,000 barrels last week, according to analysts polled by S&P Global Platts.
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