Oil prices eased on Wednesday on concerns that U.S. fuel demand may not recover as quickly as expected amid stalled talks on an economic stimulus package, overshadowing a bigger-than-expected drawdown in US crude stocks.
With investors keeping one eye on a key producer countries’ ministerial meeting later in the day, Brent crude futures LCOc1 fell 33 cents, or 0.7%, to $45.13 a barrel by 0418 GMT, having edged up 9 cents on Tuesday.
U.S. West Texas Intermediate (WTI) crude CLc1 futures were down 21 cents, or 0.5%, at $42.68 a barrel, having ended unchanged the previous day.
“Demand concerns weighed on oil prices, with U.S. economic stimulus still nowhere in sight and U.S.-Sino trade talks being postponed,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
On the positive side, U.S. crude inventories fell by 4.3 million barrels to about 512 million barrels, more than analysts’ expectations for a 2.7 million-barrel drawdown, while gasoline stocks rose, industry data from the American Petroleum Institute showed after the markets closed on Tuesday.
Oil also gave ground due to the disconcerting increase in gasoline inventories, said Stephen Innes, chief global market strategist at AxiCorp.
“It’s challenging to make heads or tails out of the oil market these days,” he said in a note. “The market is struggling to make new highs as demand concerns remain tethered to the hip of the coronavirus worries as OPEC returns more barrels to market this month.”
Investors are keenly awaiting news from Wednesday’s meeting of a ministerial panel of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a grouping known as OPEC+, which is set to review adherence to a previously agreed deal on oil output cuts.
Compliance with the cuts stood at 95-97% in July, according to OPEC+ sources and a draft report reviewed by Reuters on Monday.
Russian Energy Minister Alexander Novak is set to join the video meeting despite having tested positive for the novel coronavirus.
OPEC+ eased their cuts in August to 7.7 million barrels per day (bpd) from 9.7 million bpd previously.