Oil prices dropped today after it emerged producer cartel faces a huge surplus and the number of new US jobless claims climbed back above 1m.
Brent crude fell 2.7 per cent to $44.13 per barrel, while benchmark West Texas Intermediate was down three per cent at $41.62 per barrel.
It followed reports that some Opec members would need to cut production by an extra 2.3m barrels per day to make up for recent oversupply.
An internal report, seen by Reuters, said the surplus seen between May and July should be counteracted in August and September.
While demand has started to pick up again after a sharp fall caused by the coronavirus lockdown, Opec today warned that recovery was being hampered by fears of a second wave.
“Oil prices are coming off a little as sentiment takes a dip, the Fed highlights outlook risks and the dollar bounces back,” said Craig Erlam, senior market analyst at Oanda Europe.
“Crude prices still remain around the upper end of their ranges though as Opec+ met on Wednesday to review compliance with the previously agreed levels.”
Prices also faced a squeeze after new data showed US jobless claims had risen back above 1m.
The surprise jump came after an improvement in figures last week and will cast doubt over the pace of economic recovery.
“While hard-hit industries brought workers back in July, the level of weakness remains unprecedented, and the impact of virus-related rolling shutdowns could continue to reverse some of that improvement,” said Richard Flynn, UK managing director at Charles Schwab.