Brent crude futures fell 89 cents, or 2.3%, to $37.84 a barrel by 0302 GMT, while U.S. West Texas Intermediate crude futures were down $1.18, or 3.3%, to $35.08 a barrel.
It remains to be seen if anything new will be announced at the next Joint Ministerial Monitoring Committee (JMMC) meeting on June 18 as the production cuts announced at the April meeting are set to expire at the end of July, and signs of growing stockpiles may undermine the recent recovery in the price of oil as OPEC continues to highlight the "surge in tanker demand, driven by low crude prices and a need to push out excess supplies amid concerns about the availability of onshore storage capacity".
The U.S. Oil Fund received approval from the U.S. Securities and Exchange Commission to issue 1 billion new shares, paving the way for renewed investments into the product that's been the center of controversy.
Oil slumped 8.2 per cent on Thursday, the sharpest decline since prices fell below zero in April.
Prices for WTI, the US benchmark, are trading at roughly $36.45 this morning, about where they were late yesterday afternoon following two days of declines.
The market has shrugged off a pledge by OPEC+ to extend record output cuts, with sentiment souring this week after the Federal Reserve warned of prolonged damage to the economy by the pandemic and US inventories reached record highs.
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The sudden build up in the US commercial crude oil inventory along with the Fed's outlook on the domestic oil has once again brought the demand outlook as the agenda behind the crude oil market movement; however, considering the recent U-turn (small) in the CBOE crude oil volatility index, it could be inferred that though the supply fears are not playing the major card on the table, the market is somewhat factoring the OPEC's measures to address the supply glut.
"The past 24 hours have highlighted the perils of underestimating the economic fallout of the Covid-19 pandemic and the threat of fresh lockdowns", said PVM Oil Associates analyst Stephen Brennock.
While the OPEC and allies are bringing in a lot of supply cuts, the market is considerably undermining the supply side and responding quickly to the indication of demand-related factors.
Recently, OPEC had made a decision to extend the previous deadline of ongoing commitment, under which OPEC and allies are trimming 9.7 million barrels of production per day, by another month- now till July 2020, and apart from that the cartel had allowed some time to members who have not been complying with the landmark agreement. The deal even secured commitments from laggards such as Iraq and Nigeria after they were called out for their non-compliance.
Meanwhile, in a positive sign, demand in the United Kingdom has been steadily recovering in recent weeks, according to government data. WisdomTree's WTI Crude Oil ETF had a little over $128 million worth of outflows, according to filings. The world was also experiencing an oil glut market, with about 100 million barrels of crude produced daily.