Oil prices fell on Thursday as major producers warned of a risk to demand recovery if the coronavirus crisis is prolonged as U.S. crude inventories dropped less than expected.
Brent crude was down 36 cents, or 0.8 per cent at $45.01 a barrel by 0442 GMT, having slipped 0.2 per cent in the previous session.
U.S. oil was down 38 cents, or 0.9 per cent at $42.55 a barrel, after inching higher on Wednesday.
Stockpiles of crude in the U.S. 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 Reuter’s poll showing expectations for a 2.7 million-barrel fall.
Fuel demand was down 14 per cent 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 Organisation 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.