Oil prices drop due to increase in US crude oil inventories

16 December 2020 (Last Updated December 16th, 2020 12:06)

Oil prices fell due to the increase in the US crude oil inventories and over concerns about the fuel demand amid tighter lockdowns in Europe to contain the spread of Covid-19.

Oil prices drop due to increase in US crude oil inventories
Crude stocks in the US grew by 2 million barrels in the week to 11 December to around 495 million barrels. Credit: David Mark from Pixabay .

Oil prices fell due to the increase in the US crude oil inventories and over concerns about the fuel demand amid tighter lockdowns in Europe to contain the spread of Covid-19.

Brent crude futures dropped $0.15, or 0.3%, to reach $50.61 a barrel at 0750 GMT while US West Texas Intermediate (WTI) crude futures fell $0.13, or 0.3%, to reach $47.49 a barrel, reported Reuters.

OANDA senior market analyst Edward Moya was quoted by the news agency as saying: “Crude prices are slightly softer after the API (American Petroleum Institute) inventory report posted a second consecutive build.”

According to industry group API, crude stocks in the US grew by two million barrels in the week to 11 December to 495 million barrels.

International Energy Agency (IEA) also warned the launch of Covid-19 vaccines this month will not quickly rectify the global oil demand, which has been affected by the pandemic.

The agency revised down its oil demand estimates for 2020 by 50,000 barrels per day (bpd) and 170,000bpd for 2021, due to a reduced volume of jet fuel use given that fewer people are travelling by air.

FGE analysts wrote in a note: “On the demand side, the biggest near-term downside risk to oil demand expectations is the United States, predominately due to persistent weaknesses in US gasoline demand, given the current trajectory of Covid-19 in the country.”