NEW YORK: Oil fell more than 2 per cent to below $41 a barrel on Wednesday after US data showed crude inventories rose to a record high, reviving worries of a persistent glut due to weak demand during the lingering coronavirus crisis.
Crude stocks rose by 5.7 million barrels in the week to June 5 to 538.1 million barrels, according to a report from the US Energy Information Administration .The build exceeded analysts’ expectations but was smaller than the build of 8.4 million barrels reported on Tuesday by the American Petroleum Institute, an industry group.
“As with the broader economy we are seeing a rebound but not one that puts us where we were a year ago,” said Matt Smith, director of commodity research at Clipper Data.Brent crude fell 82 cents, or 2 per cent, to $40.36 a barrel at 10:55 EST (1455 GMT). US West Texas Intermediate (WTI) dropped 96 cents, or 2.5 per cent, to $37.98.
Both benchmarks had hit three-month highs on Monday. Brent has more than doubled since falling to a 21-year low below $16 in April. But some analysts think prices have risen too far with the pandemic still cutting demand.
“The macro factor that has supported the energy complex for more than a month could subside significantly as the strong advance in the equities is beginning to appear overcooked,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
Prices have been supported as the Organization of the Petroleum Exporting Countries (OPEC), Russia and others, a group known as OPEC+, slashed oil supplies by 9.7 million barrels per day (bpd), about 10 per cent of pre-pandemic demand.
An easing of government lockdowns has revived fuel demand by boosting travel and economic activity. OPEC+ agreed on Saturday to extend the record supply cut for another month until the end of July.
While this helped prices, the market came under pressure after Saudi Arabia, Kuwait and the United Arab Emirates decided not to extend their extra voluntary supply reductions.