Oil Prices Dropping Due to a Sudden Increase in US Inventories

Oil prices fell on Wednesday, December 16, due to a sudden increase in crude oil inventories in the United States and due to continuing investor concerns about the decline in fuel demand in light of tightening public isolation measures in Europe to combat the virus pandemic.

Brent crude futures fell 15 cents, or 0.3%, to $50.61 a barrel by 07:50, while US West Texas Intermediate crude futures fell 13 cents, or 0.3%, to $47.49 a barrel.

Crude inventories rose by 2 million barrels in the week to December 11, to about 495 million barrels, according to the American Petroleum Institute.

Analysts had expected a decline of 1.9 million barrels, according to a Reuters poll. Official government data is due for release later today.

Yesterday, Tuesday, the International Energy Agency warned that the distribution of anti-virus vaccines this month to combat the pandemic would not quickly reflect the crushing blow to global oil demand.

The agency revised down its estimate of oil demand by 50 thousand barrels per day this year and 170 thousand barrels per day for the next year, and indicated the scarcity of use of aviation fuel with fewer people traveling by air.

But progress on vaccine distribution continued on Tuesday after a COVID-19 vaccine developed by Moderna appeared to be preparing for approval by regulatory authorities in the United States this week.