The report from the American Petroleum Institute, an industry group, said crude stocks rose by 8.4 million barrels, rather than falling as analysts forecast. The U.S. government’s official stocks figures are due out later on Wednesday.
“Indications from the American Petroleum Institute show that stocks built quite a lot,” said Bjornar Tonhaugen of Rystad Energy. “What else can you do as a trader but rush to sell?”
Brent crude was down 70 cents, or 1.7 percent, to $40.48 a barrel at 12:10 GMT. U.S. West Texas Intermediate (WTI) dropped 84 cents, or 2.2 percent, to $38.10.
Both benchmarks had hit three-month highs on Monday. Brent has more than doubled since falling to a 21-year low below $16 in April. But some analysts think the market has risen too far as the CCP (Chinese Communist Party) virus pandemic continues.
“With equity markets edging lower, and a vast amount of good news baked into oil prices at these levels, it was no surprise that the oil market’s confidence wavered slightly,” said Jeffrey Halley, senior market analyst at OANDA.
Official government figures on U.S. stockpiles from the Energy Information Administration are due later on Wednesday.
Prices have been supported by a record oil supply cut of 9.7 million barrels per day (bpd), about 10 percent of pre-CCP virus daily demand, by the Organization of the Petroleum Exporting Countries (OPEC), Russia and others, a group known as OPEC+.
An easing of government lockdowns that sought to limit the spread of the CCP virus has revived demand by boosting travel and economic activity, also supporting the market.
OPEC+ agreed on Saturday to extend the record cut for another month until the end of July.
While this helped prices, the market came under pressure after Saudi Arabia, Kuwait, and the United Arab Emirates decided not to extend their extra voluntary supply reductions.
