Oil. Picture: REUTERS
Oil. Picture: REUTERS

Tokyo — Oil prices fell on Wednesday after an industry group reported a surprise rise in US crude, adding to the worry about demand that led to a steep sell-off earlier in the week.

Brent crude was trading down 30c, or 0.7%, at $41.42 a barrel by 3.47am GMT, after gaining 28c on Tuesday, while US crude dropped 34c, or 0.9%, to $39.46.

Both contracts fell more than 4% on Monday, the most in two weeks.

Surging cases of coronavirus infections in countries including France and Spain, along with the likelihood of more restrictions in Britain have renewed worry about fuel demand, just as more supply may come onto the market from Libya.

In the US, where the death toll from Covid-19 has passed 200,000, the world’s highest, crude oil inventories rose by 691,000 barrels in the week to September 18, according to industry data, compared with analysts’ forecasts for a drop of 2.3-million barrels.

Petrol stocks fell by almost 7.7-million barrels, nearly eight times expectations, suggesting some demand for fuel in the world’s biggest oil consuming nation.

Official data from the Energy Information Administration is due out later on Wednesday.

“Official US crude inventory data assumes greater than usual importance,” said Jeffrey Halley, senior market analyst at Oanda. “A surprise increase could well be enough to initiate another downward leg in crude prices.”

In Libya, the National Oil Company (NOC) expects oil output to rise to more than a quarter of a million barrels a day by next week, it said on Tuesday.

The NOC said it was restarting exports from the Zueitinia oil terminal after checking the security situation at the port and fields that pipe crude there.

An escalation in the country’s conflict led to a blockade of facilities, which is now easing, though analysts say they do not expect Libya to reach the 1.2-million barrels a day of production it was pumping previously.

In 2020 “world oil demand will be down by more than 10% on the year to around 90-million barrels a day due to the Covid-19 crisis”, Eurasia Group said in a note.

“This will mark the biggest demand shock in industry history,” it said.

Reuters

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