US crude stocks rose 1.4 million barrels to a record high, the Energy Information Administration said on Wednesday. This hit crude prices, as other details the EIA reported such as fall in gasoline stockpiles, lent limited support.
“The report was another nail in the bulls’ coffin although it was not as depressing as the price fall suggests,” said Tamas Varga of oil broker PVM. “On the positive side, oil consumption is healthy.”
Brent crude fell 19 cents, or 0.5 per cent, to $40.12 at 0835 GMT, and traded as low as $39.47. The global benchmark dropped 5.4 per cent on Wednesday. US West Texas Intermediate (WTI) crude fell 49 cents, or 1.3 per cent, to $37.52.
Oil and equities were also pressured by a rise in Covid-19 cases. New infections have surged in some US states and Australia posted its biggest daily rise in cases in two months.
“The increasing coronavirus case count in key US states has markets, oil as well as equities, worried,” said analysts at JBC Energy.
A resurgence of the novel coronavirus would weigh on oil demand, which has been recovering as some places lifted lockdowns, and economic growth. The International Monetary Fund on Wednesday predicted a deeper global recession than previously thought, which is also weighing on sentiment.
A record supply cut by the Organization of the Petroleum Exporting Countries and allies has supported the oil market, which is much stronger compared to April, when Brent hit a 21-year low below $16 a barrel and US crude went negative.
Investors are waiting to see if the producers, known as OPEC+, extend their record cut beyond July.
Read More: Crude oil prices fall below $40 on record US inventories, Covid fears
