Oil falls as big build in U.S. crude stockpiles raises spectre of supply glut

Wednesday,   18-Nov-2020   09:15 AM (IST)

Oil prices fell on Wednesday after a bigger-than-expected build in U.S. crude stockpiles stoked fears for weak fuel demand and a potential supply glut, but hopes that OPEC and its allies will postpone a planned January increase to oil output braked losses. Brent crude futures for January (LCOc1) dropped 14 cents, or 0.3%, to $43.61 a barrel by 0142 GMT having lost 0.2% on Tuesday. U.S. West Texas Intermediate crude for December (CLc1) slid 25 cents, or 0.6%, to $41.18 a barrel, reversing a 0.2% gain on Tuesday. The American Petroleum Institute (API) said on Tuesday that U.S. crude inventories rose by 4.2 million barrels last week, well above analysts' expectations in a Reuters poll for a build of 1.7 million barrels. To tackle weaker energy demand amid a new wave of the COVID-19 pandemic, Saudi Arabia called on fellow members of the OPEC+ grouping - OPEC and other producers including Russia - to be flexible in responding to oil market needs as it builds the case for a tighter production policy in 2021. OPEC+ held a ministerial committee meeting on Tuesday that made no formal recommendation. OPEC+ members are leaning towards delaying a previously agreed plan to boost output by 2 million barrels per day (bpd), or 2% of global demand, in January in an effort to support the market, sources told Reuters early this week. Supporting the case for a tighter supply policy next year, OPEC and its allies have revised oil demand scenarios for 2021 with demand seen weaker than previously anticipated, a confidential document seen by Reuters shows.