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Oil Slums Amidst Rising U.S Stockpile, COVID-19 Numbers in Asia

Oil prices fell on Thursday after a slump in the previous session, as rising U.S. stockpiles added to concerns about a hit to demand from surging coronavirus infections in Asia and possible U.S. rate hikes.

Brent crude was down 6 cents, or 0.1%, at $66.60 a barrel by 0141 GMT, having fallen 3% on Wednesday.

U.S. oil fell 7 cents, or 0.1%, to $63.29 a barrel, after a 3.3% drop in the previous session.

Oil chart
U.S WTI OIL PERFORMANCE CHART

“A resurgence in COVID-19 cases across parts of Asia is doing little to support the market in the near term,” ING Economics

Almost two-thirds of people tested in Indian show exposure to the coronavirus, suggesting a spiralling spread of the virus as the daily death toll rose to a record 4,529.

The decline in prices this week was given added impetus on Wednesday after media reports said the U.S. and Iran have made progress in talks over Tehran’s nuclear program that could result in sanctions being lifted and more supply coming to the market.

Later reports indicated that more time was needed to reach an agreement.

Speculation the Fed might raise rates weighed on the outlook for economic growth and prompted investors to reduce exposure to oil and other commodities.

The April 27-28 meeting minutes showed the Fed beginning to wrestle with the emerging difficulties of getting the $20 trillion U.S. economy fully reopened after the disruptions caused by the coronavirus pandemic.

Rising U.S. stockpiles of crude also weighed on prices, although the gain in the most recent week was below expectations.

Crude inventories increased by 1.3 million barrels last week, against analysts’ expectations in a Reuters poll for a 1.6 million barrel rise.