UNITED STATES-. Oil slipped back toward $41 a barrel after an industry report pointed to a bigger-than-expected increase in U.S. crude stockpiles, countering optimism over a recovery in Asia. Futures dropped 0.7% in New York after adding 0.2% on Tuesday. The American Petroleum Institute reported crude inventories swelled by 4.17 million barrels last week, more than double the expected gain seen in a Bloomberg survey. Rising stockpiles come as more restrictions are being rolled out across the U.S. as well as Europe to curb the spread of the coronavirus, delaying a global recovery for the oil sector, even as Asian demand returned.
An OPEC+ committee meeting, meanwhile, ended without a concrete signal that producers will reverse plans to increase output early next year, although the panel of ministers told the group to be ready to act when needed. Oil rallied above $42 a barrel on Monday after news of another vaccine breakthrough, but prices have since lost some ground as the market continues to grapple with an uneven demand recovery, as Bloomberg reports.
While China’s rebound is accelerating and Asian refiners are snapping up barrels, a resurgent virus in Europe and the U.S. has sapped consumption.
“The vaccine news-induced peaks are proving unsustainable as the oil complex balances the view between a future promise and current realities,” said Vandana Hari, founder of consultancy Vanda Insights in Singapore. Asian oil demand is expected to continue recovering through the next three-to-four months, somewhat offset by a slump in European demand, she added.
Official government data on U.S. crude inventories is scheduled for Wednesday. Based on the median estimate of responses to a Bloomberg survey, nationwide inventories expanded by 1.6 million barrels last week. Separately, API data showed that U.S. gasoline stockpiles increased by 256,000 barrels last week. If confirmed by the Energy Information Administration on Wednesday, it would be the second gain in three weeks.