Oil prices fell today amid concerns about a possible second wave of coronavirus cases in countries that have eased lockdowns, which could lead to renewed restrictions while industry data showed that US crude stocks are still rising.
Fears were overshadowed by another call from Saudi Arabia for further production cuts to achieve a balance in the market after the decline in demand caused by the spread of the virus. This after the Organisation of Petroleum Exporting Countries (OPEC) said earlier this week that it intended to institute additional production cuts.
Brent crude fell 74 cents to $28.92 a barrel, its lowest level since May 6, after rising 1.2% on Tuesday. West Texas Intermediate crude futures fell 70 cents to $25.08 a barrel, after rising 6.8% in the previous session.
On the supply side, the government of the Kingdom of Saudi Arabia has urged OPEC+ countries to further reduce oil production to restore balance in global crude markets, the government news agency reported earlier today.
Informed sources told Reuters on Saturday that the Kuwait Petroleum Corporation (KPC) will export less quantities of crude oil in June reducing 5% of the volume of their shipments in line with the so-called operational tolerance clause in their contracts.
Saudi Arabia said on Monday that it will add to the planned reductions by reducing production by an additional one million barrels per day next month, bringing production to 7.5 million barrels per day.
OPEC and other producers such as Russia - a group known as OPEC+ - had agreed to cut production by 9.7 million barrels per day in May and June, a record low, in response to a 30% drop in global fuel demand.
The American Petroleum Institute said on Tuesday that crude oil stocks in the United States rose by 7.6 million barrels last week to 526.2 million barrels, compared to analysts' expectations of an increase of 4.1 million barrels.
Official storage data from the US Energy Information Administration is scheduled for release later today.
