Following the crude inventory build-up reported in the United States, oil and petroleum prices see bearish tides this Wednesday. Investors are acting cautiously as they fear the global supply glut that could be worsened soon.
See, the number of coronavirus cases around the world continues to rise. Experts believe that the globe is facing another wave of infections which could be detrimental to most economies.
Traders are concerned that if the second wave of infections rises exponentially, it could inflict further damage to the market.
As of Tuesday, worldwide COVID-19 cases have breached the 40 million mark, adding pressure on prices. Some parts of Europe once again enter their respective lockdowns to contain the new outbreak.
As of press time, the crude oil contract was seen down by -1.73% or -0.72 points in the trading sessions. The US oil and petroleum market has seen a constant tug of war between bears and bulls in recent days.
Most experts believe that there is no drastic pullback for prices anytime soon but are still warning traders of headwinds.
Meanwhile, the benchmark Brent oil contract slips by -1.62% or -0.70 points this Wednesday. The Atlantic benchmark for oil has fluctuated and seen ranges between $42.31 and $43.03 in the market today.
Yesterday, both benchmarks saw bullish winds in the sessions, but today’s inventory report erased those gains.
According to a commodities analyst, investors are adjusting their positions as uncertainties bombard the oil and petroleum market.
Woes in the Market
Earlier today, the American Petroleum Institute reported an increase of approximately 584,000 barrels in the week ending on October 16. That brings the total build-up to about 490.6 million barrels.
Investors were actually disappointed as they initially expected a decline of about 1 million barrels prior. The surprise increase in the stockpile indicates the weakness in demand for oil and petroleum.
On the other hand, other nations are also weighing in heavily on crude prices. Russia’s energy minister said yesterday that it’s still too early to talk about the future of the market beyond December.
The statement comes a week after discussing plans to scale back on the oil output productions.
The Organization of the Petroleum Exporting Countries, including their allies, agreed to trim productions earlier this 2020.
The production cuts in January went down from 7.7 million BPD to around 5.7 million BPD as transportation gets paralyzed.
However, during that time, OPEC member, Libya, exempted itself from the massive production cut. In fact, the nation even ramped up its production as armed conflicts shut almost all its output in January.