Crude oil prices tumbled more than 4 per cent on Wednesday in anticipation of oversupply ahead. Benchmark Brent crude futures plunged by $1.7 – or 4.13 per cent – to $39.50 per barrel during the session, hurt by data showing a surge in US production as analysts assessed the prospect of global recovery amid increasing COVID-19 cases in the US and Europe. Analysts say though biggest-than-expected jump in US output dragged crude oil prices lower, supply disruption in the Gulf of Mexico due to storm Zeta limited the fall.
Brent futures were on course to settle below the key $40 per barrel mark for the first time since October 2, reversing direction immediately after beginning the day slightly stronger at $40.61 per barrel compared to their previous close of $41.20 per barrel.
US crude oil and gasoline stocks rose last week, data from industry group the American Petroleum Institute showed, with crude inventories rising by 4.6 million barrels to about 495.2 million barrels, well above analysts’ expectations in a poll by news agency Reuters for a build of 1.2 million barrels.
“Crude weakened as API noted a bigger-than-expected 4.577 million barrels increase in US crude oil stocks and an unexpected rise in gasoline stocks… Crude may remain under pressure ahead of the US Energy Information Administration’s weekly report on expectations of buildup in US crude stocks,” said Ravindra Rao, VP-head commodity research at Kotak Securities.
Energy firms and ports along the US Gulf Coast prepared on Tuesday for Zeta, the 11th hurricane of the season, as it entered the Gulf of Mexico.
The US, Russia, France and other countries have registered record numbers of infections in recent days, and European governments have introduced new curbs to try to rein in the fast-growing outbreaks.