Oil prices fell around 2% on Wednesday, abandoning the majority of Tuesday’s gains, on a rise in U.S. crude stocks and mounting coronavirus infections in the U.S. and Europe fuelling fears of a supply glut.

Reuters reports Brent crude futures were down 74 cents or 1.8% at $40.46 a barrel, having risen nearly 2% the day before. U.S. oil was down 90 cents, or 2.3% at $38.67, after gaining 2.6% on Tuesday.

According to data from the American Petroleum Institute, U.S. crude oil and gasoline stocks increased last week, with crude inventories rising by 4.6 million barrels to around 495.2 million barrels, far surpassing analysts’ forecasts in a Reuters poll for a rise of 1.2 million barrels.

Hiroyuki Kikukawa, general manager of research at Nissan Securities commented: “The higher-than-expected build in U.S. crude stocks prompted fresh selling, while concerns over supply disruption from Hurricane Zeta have receded.”

Kikukawa added: “Rising COVID-19 cases with the lack of a U.S. coronavirus fiscal relief package also dented investors’ risk appetite.”

He forecasts the gloomy sentiment to keep pressure on prices up until the U.S. presidential election on November 3.

Over the past few days, the U.S., Russia, France and other nations have reported record numbers of coronavirus cases, with European governments introducing new restrictions.

“With and without another lockdown, movement across Europe and North America will fall during the coming winter months as most people avoid travel and big gatherings,” said Henning Gloystein, director of global energy & natural resources at Eurasia Group on Wednesday.

“This will dent fuel consumption and almost certainly force OPEC and its allies to continue withholding oil supply well into 2021,” he added.
OPEC+ is planning to reduce the size of production cuts in January from the current 7.7 million barrels per day to approximately 5.7 million barrels per day.