Oil prices declined Wednesday following U.S. President Donald Trump’s cancellation of a fourth stimulus package and a surprise build in the U.S. oil stockpiles.
Brent crude futures dipped 73 cents or 1.71%, to $41.92 a barrel at 11:34 West Africa Time (WAT) while U.S. West Texas Intermediate crude oil futures slipped 90 cents or 2.21% to $39.77.
Bonny Light, Nigeria’s top crude grade, notched up 99 cents or 2.45% to close at $41.38 on Tuesday. Qua Iboe, another major national oil grade, edged up by $1.28 or 3.28% to $40.30 the same day.
Edward Moya, senior market analyst at OANDA, said “crude prices got hammered with one-two punch after President Trump sent all risky assets into free fall after ending negotiations on fiscal stimulus and after US crude stockpiles posted their first build in four weeks.”
Trump, who is still receiving treatment for coronavirus, terminated negotiations with Democrats on Tuesday in respect of an economic support package for the U.S., with the presidential election just weeks ahead.
His “decision to end fiscal stimulus talks surprised markets. While many didn’t expect to see a deal reached before the election, the abrupt end sent all risky assets sharply lower,” Moya stated.
Oil prices also took a bashing from statistics from the American Petroleum Institute revealing that United States crude inventories climbed by 951,000 barrels last week.
“(This was) not exactly what the recovery doctor ordered as the oil market was already tanking from a two-week high after President Trump quashed hope for a pre-election stimulus deal,” Stephen Innes of online brokerage, AxiCorp, said.
Losses were nevertheless checked by supply side.
Oil and gas firms firmed up security at offshore production platforms, going on to salvage employees on Tuesday, a couple of them for the sixth time this year, as Hurricane Delta homed in on Gulf of Mexico.
It has forced 29.2% of offshore oil production in the Gulf to stop, an area responsible for 17% of the entire U.S. oil output.
The Lederne labour union in Norway Tuesday said it will prolong its current industrial action from 10th October except a wage agreement is consummated ahead of the date. Six offshore oil and gas fields closed operations on Monday due to the strike, scaling back Norway’s production capacity by 8%.
