Oil falls on U.S. crude inventory build, coronavirus fears

Oil prices dropped on Wednesday as the inventory build in U.S. industry data exceeded expectations, while coronavirus cases continue to surge in the United States, the world’s biggest oil consumer.

The American Petroleum Institute reported a 7.5-million-barrel increase in crude inventories last week compared with expectations for a 2.1-million-barrel decline. 

Brent crude was down 0.7%, or 32 cents, to $44 per barrel. U.S. West Texas Intermediate crude fell 0.8%, or 33 cents, at $41.59 per barrel.

Oil prices rose nearly $1 in the previous session, their highest since early March.

Also weighing on oil prices was the contraction in Japan’s factory activity for the 15th straight month, showing lower economic activity in the fourth-largest oil consumer.

Meanwhile, OPEC’s second-largest oil producer, Iraq is still not meeting its target cut under the deal agreed in the organization’s meeting.

Southern Iraqi exports averaged 2.70 million bpd in the first 20 days of July, according to data from Refinitiv Eikon.