The American Petroleum Institute said US crude inventories fell more than expected in the latest week, according to a report released after market close on Wednesday.
The oil and gas rig count, an early indicator of future output, rose for the fifth week in a row, increasing 13 to 282 in the week to October 16, energy services firm Baker Hughes Co said in its closely followed report on Friday. "Therefore, despite the initial enthusiasm, we find that the uptick in oil prices today is unjustified".
"While the 3Q20 recovery in some economies was impressive, the near-term trend remains fragile, amid a variety of ongoing uncertainties, especially the near-term trajectory of COVID-19", OPEC's report said of the economic outlook.
But under a "delayed recovery scenario", it said the energy demand recovery is pushed back to 2025.
The "price slide was attributable to the growing concerns about new large-area lockdowns as coronavirus continues to spread rapidly, particularly in Europe", Carsten Fritsch, energy analyst at Commerzbank Research, said in a note on Friday.
The bearish demand outlook and rising supply from Libya may mean OPEC+ could roll over the existing cuts into next year, OPEC+ sources said on Thursday.
In the United States, drillers have begun adding oil rigs since cutting them to a 15-year low in August.
On the supply side, crude oil production in the US Gulf of Mexico continued to recover four days after Hurricane Delta made landfall with the amount shut falling to 44% on Tuesday from 69% on Monday.
Also adding to the upside in prices, rumours keep gyrating around the possibility that OPEC+ members could postpone their intentions to increase the oil output - originally scheduled for the end of the year - amidst the persistent advance of the second wave of the coronavirus pandemic. The growth forecast is 80,000 bpd less than expected a month ago. This is why we describe the oil market as artificially, and not structurally, tight at present.
"Crude prices are looking very vulnerable as the coronavirus continues to spread like wildfire across Europe and trending higher in the US", said Edward Moya, a senior market analyst at OANDA.