Oil slipped below $40 a barrel on Thursday after a more than 5 percent fall the previous session, as record-high US crude inventories and a resurgence in coronavirus cases cast doubt on a recovery in fuel demand.
US crude stocks rose 1.4 million barrels, the Energy Information Administration said on Wednesday. This hit crude prices, although other details the EIA reported such as a fall in gasoline stocks as demand rose, lent limited support.
“Demand, which was expected to rise as COVID-19 subsides, is again under threat with infections rising in key markets,” said Bjornar Tonhaugen of Rystad Energy.
A record supply cut by the Organization of the Petroleum Exporting Countries and allies has supported the oil market, which is much stronger compared to April, when Brent hit a 21-year low below $16 a barrel and US crude went negative.
Investors are waiting to see if the producers, known as OPEC+, extend their record cut beyond July.