Oil prices steadily decline on Wednesday morning amid news from the American Petroleum Institute (API). According to the data, an unexpected increase in black gold reserves was recorded in the United States last week.
The price of February futures for Brent North Sea crude on the London ICE Futures exchange fell by 1.60% to $49.28 per barrel. At the close of the session on Tuesday, these contracts sank by 1.6% to $50.08 per barrel.
According to the New York Mercantile Exchange (NYMEX), the price of WTI crude oil futures for February slipped by 1.64% and showed $46.25 per barrel. On Tuesday, futures fell in value by 2% to $47.02 per barrel.
Such a strong negative trend proves that investors are still assessing the impact of the spectacular API data. The Petroleum Institute said that black gold reserves in the United States increased by 2.7 million barrels last week, with a forecast of a decrease of 3.25 million barrels. Official data from the US Department of Energy will be released on Wednesday evening. Experts expect that the agency will report a decrease in reserves by 3.2 million barrels.
Another factor of pressure on the oil market is the disappointing statistics on the growth of COVID-19 cases. In the United States, more than a million new cases were reported in the previous week.
The situation in Europe is nothing better. On fears of the spread of a new strain of coronavirus, the authorities of European states have begun to introduce strict restrictive measures that threaten to further weaken the already low demand for oil.
The new mutation of the virus, which was first detected in the UK, has now been identified in Germany, Switzerland, and France. In this regard, about fifty countries have suspended or restricted air traffic with the United Kingdom, effectively isolating this country.
The uncontrolled wave of panic among countries around the world indicates the existence of a risk of new lockdowns and tourist restrictions in the coming 2021. This prospect, in turn, threatens to slow the recovery in oil demand.
Another factor that reduces the attractiveness of investing in black gold was the strengthening of the US dollar against the background of a general increase in demand for safe assets after the news about the coronavirus mutation.