Oil plunges as U.S. crude stocks build amid second wave fears

Oil prices dropped on Wednesday as U.S. crude and fuel inventories rose, raising concerns of oversupply amid fears of a second coronavirus wave.

Brent crude futures lost 2.2%, or 89 cents, at $40.07 per barrel. U.S. West Texas Intermediate futures plunged 2.9%, or $1.13, at $37.25 per barrel.

Both benchmarks rose 3% on Tuesday after the International Energy Agency revised its forecast for the 2020 oil demand to 91.7 million bpd. 

However, the increase in U.S. crude and fuel stocks raised worries about oversupply and pressured oil prices. This came amid easing restrictions and sudden spikes in cases in several U.S. states.

U.S. crude oil stocks climbed 3.9 million barrels to 543.2 million barrels in the week ended June 12. Gasoline stocks increased by 4.3 million barrels, while distillate fuels, including diesel and heating oil, surged 919,000 barrels. 

An OPEC-led panel is set to meet on Thursday to evaluate the producers’ compliance with the record production cuts and assess the need for additional measures.

Oil producer Iraq has slashed its exports by 8%, or 300,000 bpd in its compliance to the agreed output cuts.