NEW YORK: Oil prices fell nearly 2% on Wednesday after U.S. President Donald Trump dashed hopes for another stimulus package to boost the coronavirus-hit economy and after U.S. crude inventories rose in the most recent week.
Brent crude futures fell 66 cents, or 1.6%, to settle at $41.99 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 72 cents, or 1.8%, to settle at $39.95 a barrel.
White House Chief of Staff Mark Meadows said he was not optimistic that a comprehensive deal could be reached on further COVID-19 financial aid and that the Trump administration backed a more piecemeal approach.
“Trump pulling out of relief negotiations generates a lot of uncertainty about the economy,” said Harry Tchilinguirian, head of commodities research at BNP Paribas.
Oil prices were also hit by a slightly larger-than-expected build in U.S. crude inventories. Crude inventories rose 501,000 barrels last week, government data showed, compared with analysts’ expectations in a Reuters poll for a 294,000-barrel rise.
Meanwhile, gasoline stocks fell by 1.4 million barrels in the week to 226.8 million barrels, their lowest since November, compared with expectations for a 471,000-barrel drop.? Distillate stockpiles fell by 962,000 barrels, in line with expectations.
“We are seeing solid improvement in the refined product demand front,” said John Kilduff, partner at Again Capital LLC in New York.
Energy companies secured offshore platforms and evacuated workers on Tuesday, some for the sixth time this year, as Hurricane Delta threatened U.S. oil output in the Gulf of Mexico.
The storm has shut 29% of offshore oil production in the Gulf, which accounts for 17% of total U.S. crude output.
In Norway, the Lederne labour union said on Tuesday that it will expand oil strike from Oct. 10 unless a wage deal can be reached. Six offshore oil and gas fields shut down on Monday because of the strike, cutting Norway’s output capacity by 8%.
Norway’s Johan Sverdrup oilfield, the North Sea’s largest with an output capacity of up to 470,000 barrels of oil per day, will likely have to shut production unless the strike ends by Oct. 14, operator Equinor said on Wednesday.
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