Oil prices fell on Wednesday, giving up earlierÂ gains, after Saudi Aramco said it had been directed by the energy ministry toÂ raise its production capacity by a million barrels per day.
Saudi Aramco Chief Executive Amin Nasser said the state-run oilÂ giant had been asked by the Ministry of Energy to boost its production capacityÂ to 13 million barrels per day (bpd) from 12 million bpd now.
Saudi has been pumping around 9.7 million bpd in the past few months, butÂ has extra capacity it can turn on and has hundreds of millions of barrels ofÂ crude in storage.
Oil prices had climbed earlier in the day, recouping nearly half of Monday’sÂ 25% losses, on hopes spending cuts by North American producers to cope withÂ multi-year low crude prices would lead to a drop in output.
U.S. crude oil inventories rose in the most recent week, while gasoline andÂ distillate stocks dropped, data from industry group the American PetroleumÂ Institute showed.
Meanwhile, worries about the economic fallout from the coronavirus outbreakÂ and its impact on energy demand continued to pressure oil prices.Â
Policymakers and central banks have been taking measures to bolster theirÂ economies against disruption caused by the virus outbreak, the latest being theÂ Bank of England that unexpectedly cut interest rates by half a percent onÂ Wednesday.
“Coronavirus is still spreading globally and no doubts that the virus spreadÂ in major economies like the United States will continue to hurt oil demand,”Â said Victor Shum, vice president of Energy Consulting at IHS Markit.
“I think we are looking at $30 levels (in Brent) and I would not beÂ surprised in some day to see prices lower than $30.”
The flu-like coronavirus, which can be transmitted from person to person,Â originated in China late last year and has spread to more than 60 countriesÂ since then. It has infected over 100,000 people and killed more than 4,000Â globally.
On Wednesday the U.S. Energy Information Administration said that for the week ending March 6 inventories increased by 7.7. million barrels.