Oil drops as report shows big jump in US stockpiles
SINGAPORE: Oil fell after an industry report showed a sharp jump in US inventories, adding to concern that supply keeps growing as demand ebbs.
Futures in New York dropped as much as 1.1% after closing up 1% on Wednesday. The American Petroleum Institute reported crude inventories rose by 10.5 million barrels last week, according to people familiar with the data.
That would be the biggest increase since February 2017 if confirmed by the official Energy Information Administration figures due yesterday.
The Organisation of Petroleum Exporting Countries (Opec) faces a “serious challenge” to defend oil prices next year as fuel-demand growth could slow further amid a wave of new supply from the US, Brazil and the North Sea, the International Energy Agency warned on Wednesday.
Progress toward a limited U.s.china trade deal, while positive, isn’t likely to have a major impact on global economic growth unless existing tariffs are rolled back. The best-case scenario on Us-china trade would be a truce and no further tariff increases, Daniel Hynes and Soni Kumari, commodity strategists at ANZ Banking Group Ltd, said in a note. There’s also still a high chance of more supply disruptions in the Middle East, they said.
West Texas Intermediate for November delivery dropped 55 cents, or 1%, to US$52.81 a barrel on the New York Mercantile Exchange as of 7:24am in London. The contract added 55 US cents on Wednesday, its first gain in three days.
Brent crude for December settlement fell 54 cents, or 0.9%, to $58.88 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a premium of US$5.94 to WTI for the same month.
If the EIA data also shows an increase in US. stockpiles that would be the fifth straight weekly gain, the longest run since February. American inventories probably rose by 3 million barrels last week, according to the median estimate in a Bloomberg survey.