Oil drops as U.S. inventories climb, raising oversupply concerns

Oil prices dropped on Wednesday after U.S. crude and fuel stocks rose, raising concerns about oversupply and declining demand amid the pandemic.

Brent crude futures lost 1.4%, or 59 cents, at $40.59 per barrel. U.S. West Texas Intermediate futures fell 1.9%, or 72 cents, at $38.22 per barrel.

Both benchmarks rose to their highest levels on Monday.

U.S. crude stocks rose 8.4 million barrels in the week ended June 5. Distillate fuel stocks, including heating oil and diesel fuel, climbed 4.3 million barrels. 

While the U.S. unemployment rate fell in April, job hiring dropped to a record low, indicating that the labor market could take years to fully recover.

In Japan, machinery orders fell at its fastest pace in two years. However, the refinery run rate rose to 54.5%.

Oil prices have been buoyed in recent weeks amid the record production cuts imposed by OPEC and its allies.