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UPDATE 3-Oil prices slip as U.S. inventory build stokes fears of supply glut

Wed, 21st Oct 2020 05:06

* U.S. crude stocks rise vs analysts forecast of draw

* Worldwide COVID-19 cases cross 40 million, fuelling demand
fears

* Hopes for U.S. deal on coronavirus relief offer some
support
(Updates prices, adds comment)

By Julia Payne

LONDON, Oct 21 (Reuters) - Oil prices eased on Wednesday
after a surprise build-up in U.S. crude stockpiles stoked
concerns about a global supply glut and a spike in global
COVID-19 cases fuelled fears of a stalled oil demand recovery.

Brent crude futures for December delivery were at
$42.66 a barrel, down 50 cents, or 1.16%, as of 1027 GMT, while
December U.S. West Texas Intermediate (WTI) crude futures
slipped 56 cents, or 1.34%, to $41.14. Both benchmarks rose in
the previous session.

"Lower European equity markets and a surprise crude build
are in my view the factors weighing on oil prices today. The
market is probably also wanting to see if the EIA confirms the
API report later today and any news on a fiscal package in the
U.S.," Giovanni Staunovo, analyst at UBS Bank, said.

Crude inventories rose by 584,000 barrels in the week to
Oct. 16 to 490.6 million barrels, data from industry group the
American Petroleum Institute (API) showed, compared with
analysts' expectations in a Reuters poll for a draw of 1 million
barrels.

Data from the U.S. Energy Information Administration (EIA)
is due out later on Wednesday.

Adding to pressure, worldwide COVID-19 cases crossed 40
million on Tuesday, with some parts of Europe imposing renewed
lockdown measures.

On the supply side, Russia's energy minister said on Tuesday
it was too early to discuss the future of global oil production
curbs beyond December, less than a week after saying plans to
scale back existing output restrictions should proceed.

Earlier this year the Organization of the Petroleum
Exporting Countries (OPEC) and allies including Russia -
together known as OPEC+ - agreed to trim production cuts in
January from a current 7.7 million barrels per day (bpd) to
roughly 5.7 million bpd.

At the same time, OPEC member Libya, which is exempt from
the cuts, is also ramping up production after armed conflict
shut almost all of the country's output in January, pumping more
oil into an oversupplied market.

The battle over a hefty, new U.S. coronavirus aid bill was
set to spill into Wednesday as the White House and Democrats try
to strike a deal before the Nov. 3 presidential and
congressional elections, now with the encouragement of President
Donald Trump.
(Additional reporting by Yuka Obayashi in Tokyo; Editing by
Kenneth Maxwell, Christian Schmollinger, Alexandra Hudson)

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