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Oil futures slipped Wednesday after a report by the International Energy Agency underlined fears that an acceleration in new COVID-19 cases around the world will dent demand for crude.
West Texas Intermediate crude for November delivery CL.1, +0.82% was down 10 cents, or 0.3%, at $401.0 a barrel on the New York Mercantile Exchange. December Brent crude BRN00, +0.77%, the global benchmark, was off 5 cents, or 0.1%, at $42.40 a barrel on ICE Futures Europe.
The global tally of confirmed cases of COVID-19 climbed to 38.2 million on Wednesday, with 16 U.S. states adding more new cases in the last seven days through Monday that in any other since the start of the pandemic.
Oil was lifted Tuesday by data that showed a jump in crude imports by China, but with the focus on a pickup in new cases, “it’s bound to be a difficult journey higher not only from COVID headlines, but elevated oil inventories will continue to be a dead weight on prices over the short-term, dissuading big oil traders from building aggressive long positions ahead of the inventory reports,” said Stephen Innes, chief global markets strategist at Axi, in a note.
The Paris-based IEA painted a picture of contracting supply, penciling in a 4-million-barrel-a-day drop in the fourth quarter, but the agency warned that the drawdown is coming off record inventory levels and could falter as a sharp rise in COVID-19 cases in the developed world results in new restrictions on movement.
Read: IEA warns of faltering recovery due to COVID-19
The climbing case number “surely raises doubts about the robustness of the anticipated economic recovery and thus the prospects for oil demand growth,” the IEA said.
Meanwhile, Saudi Arabia’s Crown Prince Mohammed bin Salman and Russian President Vladimir Putin talked by telephone on Tuesday, the official Saudi Press Agency said. The pair “agreed on the importance of all oil-producing countries to continue cooperating and abiding by OPEC+ agreement to achieve these goals for the benefit of both producers and consumers,” the Saudi Press Agency said.
