Oil prices slid on Wednesday as concerns grew that U.S. fuel demand may not recover quickly amid stalled talks on a post-coronavirus economic stimulus package, overshadowing a bigger-than-expected drawdown in U.S. crude stocks.
Brent crude futures fell 38 cents, or 0.8 per cent, to $45.08 a barrel having edged up 9 cents on Tuesday, while thenU.S. West Texas Intermediate, (WTI) crude futures was down 25 cents, or 0.6 per cent, at $42.64 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.
U.S. President Donald Trump on Tuesday said he postponed trade talks with China, adding that he does not want to talk to China right now.
“But losses were limited by positive news such as a drop in U.S. crude stocks,” Kikukawa said, predicting prices will stay within a tight range amid the mixed signals.
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, industry data from the American Petroleum Institute, showed after the markets closed on Tuesday.
Investors are also 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 per cent 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.