Oil Drops on Surprise US Stock Build

Oil Drops on Surprise US Stock Build
Oil Drops on Surprise US Stock Build

Oil prices dropped on Wednesday after an industry report showed an unexpected rise in US crude oil inventories, and as President Donald Trump rattled markets by threatening not to sign a long-awaited US Covid-19 relief bill.
Brent crude futures were down 38 cents, or 0.8%, to $49.70 a barrel, while US West Texas Intermediate crude futures fell 40 cents, or 0.9%, to $46.62 a barrel, CNBC reported. Both contracts fell nearly 2% on Tuesday in a second straight session of declines.
Oil markets also remain jittery about the future recovery of demand as a new, highly infectious strain of the novel coronavirus has hit Britain, prompting much of the world to shut its borders to the country.
“This is the holiday period, when people go out and that prompts fuel demand. But now, a majority of flights have been cancelled to and from the UK, so this is going to impact oil demand (overall),” said Ravindra Rao, vice president of commodities at Kotak Securities.
“Sometime earlier, the expectation was that the virus threat was subsiding, and demand was slowly and slightly moving higher. But with this ... new coronavirus strain, the market is purely operating on sentiment right now that it is going to create more restrictions.”
The immediate support for Brent is near $49 per barrel, Kotak Securities said. A close below that level could lead to a fall to $46, it said.

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