Oil prices edged lower in post-settlement trade on Tuesday after an industry group reported a bigger build than expected in US crude stockpiles, adding to worries that new coronavirus lockdowns could hit demand.
During the session, prices were narrowly mixed as the demand fears offset hopes for a vaccine and talk of tighter OPEC+ supply policies.
Brent futures fell 7 cents, or 0.2%, to settle at $43.75 a barrel.
US crude gained 9 cents, or 0.2%, to settle at $41.43.
After settlement, US crude edged lower to $41.19 a barrel when industry group the American Petroleum Institute (API) said crude inventories rose more 4.174 million barrels last week. That far exceeded the forecast increase of 1.7 million barrels, according to a Reuters poll.
Crude prices had pared losses ahead of settlement, after the Pentagon said President Donald Trump will sharply reduce US forces in Afghanistan from 4 500 to 2 500.
“Crude prices rallied (from negative to little changed) after the Trump administration announced further drawdown of troops in Afghanistan and Iraq,” said Edward Moya, senior market analyst at OANDA in New York, noting instability in the region is a growing concern for some top military advisers and the oil market.
On Monday, Brent closed at a 10-week high following Moderna Inc’s announcement that its coronavirus vaccine was 94.5% effective. That followed similar news from Pfizer Inc last week.
The short-term economic outlook remained hazy with several European nations tightening restrictions as coronavirus cases increase.
To tackle weaker energy demand in a resurgent pandemic, Saudi Arabia called on fellow OPEC+ members to be flexible as it builds the case for a tighter production policy in 2021.
OPEC+, which groups the Organisation of the Petroleum Exporting Countries (OPEC), Russia and others, lowered its outlook on oil demand growth for 2021, according to a confidential document seen by Reuters.
An option gaining support among OPEC+ nations is to keep the existing cuts of 7.7 million barrels per day (bpd) for a further three to six months, sources said, rather than tapering the reduction to 5.7 million bpd in January.
OPEC+ held a ministerial committee meeting on Tuesday that made no formal recommendation. The group will hold a full meeting on November 30-December 1.
“The lack of a recommendation forces the market to wait for the next episode of this saga before feeling comfortable again,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy, noting “we are in for a multi-month supply glut” if OPEC+ increases output from January.