By Adam Claringbull
Investing.com – Oil prices were down on Wednesday morning in Asia, losing what gains it had recouped in Tuesday’s rally. U.S. lack of demand, surging COVID-19 cases, and Libya’s return to the markets are all pushing prices down.
Brent oil futures fell 1.87% to $40.83 by 11:53 PM ET (3:53 AM GMT) and WTI futures slid 2.22% to $38.69.
Oil dropped Tuesday’s gains in Asian trade this morning, with indices heading down over demand worries and oversupply. U.S. stimulus and election uncertainty also added to the market’s woes.
Tuesday’s crude oil supply data from the American Petroleum Institute (API) showed a build of 4.577 million barrels for the week ending Oct. 23, with gasoline inventories also rising. A build of 1.2 million barrels had been expected.
“The higher-than-expected build in U.S. crude stocks prompted fresh selling while concerns over supply disruption from Hurricane Zeta have receded,” general manager of research at Nissan (OTC:NSANY) Securities, Hiroyuki Kikukawa, told Reuters.
The coronavirus pandemic is also weighing heavily on the market, with case numbers rising rapidly across Europe and the U.S., pushing an economic recovery ever further into the future. Johns Hopkins University data has global cases nearing 44 million as of Oct. 28, with 1.17 million deaths.
Libya’s continued restoration of supply is also helping drive the fall in prices, with the North African country expected to reach 1 million barrels per day (bpd) shortly, up from less than 100,000 bpd just a few months ago. This is slightly offset by the arrival of Hurricane Zeta in the Gulf of Mexico, causing rig and refinery shutdowns.
The likely absence of any U.S. COVID-19 relief deal until after the Nov. 13 U.S. elections is yet another headwind for the market, with President Trump unable to broker a deal between his own Republican party-controlled Senate and the Democrat-controlled House of Representatives.
“Rising COVID-19 cases with the lack of a U.S. coronavirus fiscal relief package also dented investors’ risk appetite,” Nissan Securities' Kikukawa said, adding that the gloomy sentiment will keep prices under pressure over the coming days.
Investors now await data from the U.S. Energy Information Administration, due later in the day.