Oil prices fell on Thursday as major producers warned of a risk to demand recovery if the coronavirus crisis is prolonged, while U.S. crude inventories dropped less than expected.
U.S. oil was down 98 cents, or 2.34%, at $41.71 a barrel, after inching higher on Wednesday.
Brent crude was down $1.11, or 2.46%, at $44.06 a barrel by 0442 GMT, having slipped 0.2% in the previous session.
Stockpiles of crude in the United States fell a fourth straight week, even as net imports rose, the Energy Information Administration (EIA) said on Wednesday. However, the 1.6 million-barrel decline for the week to Aug. 14 was less than a Reuters poll showing expectations for a 2.7 million-barrel fall.
Fuel demand was down 14% from the year-earlier period over the last four weeks, the EIA data also showed.
Global oil demand should recover to pre-pandemic levels as soon as the fourth quarter, the Saudi Energy minister said on Wednesday, while urging the kingdom’s OPEC+ partners to comply with a deal to cut output.
Saudi Energy Minister Prince Abdulaziz bin Salman was speaking at a virtual meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia – a grouping known as OPEC+. The meeting was reviewing compliance with production cuts and left output reductions unchanged.
“The positive outcome from the OPEC+ meeting was counter-balance (to) the EIA reporting that U.S. oil inventories last week fell by (less than the) consensus,” said Avtar Sandu, senior manager commodities at Phillip Futures.
Still, a draft OPEC+ statement, seen by Reuters, said a second extended wave of the pandemic posed a major risk for the oil market recovery.
The group pressed members such as Nigeria and Iraq to do more to meet their quota commitments after they exceeded them between May and July.
OPEC on its own in past decades generally produced well over 30 million barrels per day (bpd) of oil but after this year’s cuts its output has fallen to 20 million to 22 million bpd.