Oil falls 2% despite a sudden drop in US crude inventories

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Oil pump in Canada. Reuters Archive

NEW YORK (Reuters) – Oil prices fell about 2 percent on Wednesday despite the first drop in US crude inventories since January, as the Federal Reserve Chairman raised concerns with grim statements warning of several months that it might take the economy to recover from the Corona virus.

Oil had risen in anticipation of a recovery in fuel demand, as producers cut supplies to reduce oversupply in the midst of the pandemic. But crude today and other high-risk assets, such as stocks, fell today, as government signals that the recovery could take time.

The benchmark price for Brent, the world benchmark, fell 79 cents, or 2.6 percent, to $ 29.19 a barrel. US West Texas Intermediate crude futures ended 49 cents, or 1.9 percent, at $ 25.29 a barrel.

Jerome Powell, Chairman of the Reserve Board, gave a pessimistic assessment of the US economy on Wednesday and renewed skepticism about negative interest rates.

“There was a black cloud because of that … it was comments from negativity that have even shattered the impact of the (weekly US oil inventory) report that was simply the most blatant cause of price hikes since January,” said Bob Yauger, director of energy contracts at Mizuho in New York.

The US Energy Information Administration said that US crude inventories fell 745 thousand barrels last week, while analysts in a Reuters poll expected to rise 4.1 million barrels.

Prepared by Ahmed Elhamy for the Arabic Bulletin





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