Oil prices decline over 2% on US stimulus impasse, stockpile rise

Oil prices fell on Wednesday after US President Donald Trump dashed hopes for a fourth stimulus package to boost the coronavirus-hit economy, with prices also pressured by a larger-than-expected rise in US crude inventories. Brent crude futures were down $1.05, or 2.5 per cent, to $41.60 a barrel by 7.33 pm (IST) and US West Texas Intermediate (WTI) crude declined $1.19, or 2.9 per cent, to $39.48.

“Trump pulling out of relief negotiations generates a lot of uncertainty about the economy ... we also didn’t get a constructive set of the data in terms of oil consumption,” said Harry Tchilinguirian, head (commodities research), BNP Paribas.

White House Chief of Staff Mark Meadows on Wednesday said he was not optimistic that a comprehensive deal could be reached on further Covid-19 financial aid and that the Trump administration backed a more piecemeal approach.

Crude prices were also hit by American Petroleum Institute data showing US oil stockpiles rose by 951,000 barrels last week.

“(This was) not exactly what the recovery doctor ordered as oil market was already tanking from a two-week high after President Trump quashed hope for a pre-election stimulus deal,” said Step­hen Innes, chief market strategist, at online brokerage AxiCorp.

Losses were capped by restrictions on the supply side.