Oil prices tumbled over 5 per cent, or more than $US2 a barrel overnight, after US crude storage hit another record and coronavirus cases rebounded in countries like Germany and surged in heavily populated areas of the United States. The United States had its second-largest rise in infections since the pandemic began. Mounting infections there as well as in China, Latin America and India have unnerved investors and pressured oil prices. “The market is signalling that if it doesn’t get constant reassurance that we are emerging from the breakdown in demand that happened because of the pandemic, then higher oil prices really don’t make sense,” said Gene McGillian, vice president of market research at Tradition Energy. Brent crude settled at $US40.31 a barrel, down $US2.32, or 5.4 per cent. On Tuesday, Brent hit its highest price since early March, just before the pandemic and Saudi-Russia price war roiled markets.

US West Texas Intermediate (WTI) crude settled at $US38.01 a barrel, losing $US2.36, or 5.8 per cent.

A stronger US dollar, which moves inversely with oil, and a slump in equities also weighed on prices.

US crude oil inventories swelled last week by 1.4 million barrels, exceeding expectations for a 299,000-barrel rise, the Energy Information Administration said.

That marked the third straight record for crude in US storage.

The International Monetary Fund said the pandemic is causing wider and deeper economic damage than first thought, and it slashed its 2020 global output forecasts further.

India’s oil imports in May hit the lowest since October 2011 as refiners with brimming crude inventories cut purchases.

China, the world’s top crude importer, is also expected to slow imports in the third quarter, after record purchases in recent months.

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