Coronavirus, OPEC+, U.S. fuel demand in focus

The Wilmington ARCO refinery is seen before dawn on December 19, 2003 in Los Angeles, California.

David McNew | Getty Images

Oil prices slid on Wednesday as concerns grew that U.S. fuel demand may not recover quickly amid stalled talks on a post-coronavirus economic stimulus package, overshadowing a bigger-than-expected drawdown in U.S. crude stocks.

With investors keeping one eye on a key producer countries’ ministerial meeting later in the day, Brent crude futures fell 38 cents, or 0.8%, to $45.08 a barrel by 0029 GMT, having edged up 9 cents on Tuesday.

U.S. West Texas Intermediate crude futures was down 25 cents, or 0.6%, at $42.64 a barrel, having ended unchanged the previous day.

“Demand concerns weighed on oil prices, with U.S. economic stimulus still nowhere in sight and U.S.-Sino trade talks being postponed,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

U.S. President Donald Trump on Tuesday said he postponed trade talks with China, adding that he does not want to talk to China right now.

“But losses were limited by positive news such as a drop in U.S. crude stocks,” Kikukawa said, predicting prices will stay within a tight range amid the mixed signals.

On the positive side, U.S. crude inventories fell by 4.3 million barrels to about 512 million barrels, more than analysts’ expectations for a 2.7 million-barrel drawdown, industry data from the American Petroleum Institute showed after the markets closed on Tuesday.

U.S. government inventory data is due on Wednesday at 1430 GMT.

Investors are also keenly awaiting news from Wednesday’s meeting of a ministerial panel of the Organization of the Petroleum Exporting Countries and allies including Russia, a grouping known as OPEC+, which is set to review adherence to a previously agreed deal on oil output cuts.

Compliance with the cuts stood at 95-97% in July, according to OPEC+ sources and a draft report reviewed by Reuters on Monday.

Russian Energy Minister Alexander Novak is set to join the video meeting despite having tested positive for the novel coronavirus.

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