Brent crude futures fell to $27.93, its lowest since the beginning of April, giving up earlier gains to sustain losses from yesterday's drop of nearly more than 7%. WTI also fell to $19.19, after dropping 10.3% in the previous session.
Both crudes were stronger earlier in the session, as investors looked for long positions after Tuesday's pullback, but higher US crude inventories raised concerns that lower global production by producers would not offset lower fuel demand due to efforts to contain the coronavirus pandemic.
According to data from the American Petroleum Industry Group on Tuesday, US crude stocks rose by 13.1 million barrels in the week ending April 10, which is more than analysts' forecasts of about 11.7 million barrels.
Warnings from the International Monetary Fund (IMF) that we could be entering the worst global downturn since the Great Depression of the 1930s have eased investor sentiment. The IMF said yesterday that the global economy is expected to shrink by 3% during the year 2020 in a staggering collapse driven by the coronavirus.
However, consumer's hopes of buying strategic stocks were boosted earlier in the session.
Officials and sources from OPEC and its Russian-led allies - a group known as OPEC+, indicated that the International Energy Agency (IEA), the agency responsible for energy monitoring in most industrialised countries in the world, may announce the purchase of up to several million barrels to support OPEC+ production cuts.
The US Energy Department also said on Tuesday that it is negotiating with 9 energy companies to store about 23 million barrels of domestic oil in their strategic oil reserves.
US shale oil production is expected to drop by 194,000 barrels per day in April, the highest figure ever recorded, according to the US Energy Information Administration.