Surprise stockpile increase knocks oil into one-month low

Oil slipped to the lowest level in nearly a month after expanding American stockpiles overshadowed tensions between the U.S. and Saudi Arabia over the disappearance of a prominent kingdom critic.

Futures fell 1.6 percent in New York. U.S. inventories rose 6.49 million barrels last week, according to government data released Wednesday, more than twice the amount forecast in a Bloomberg survey. Even as the disappearance of Jamal Khashoggi kept the market on edge, President Donald Trump cautioned against putting the entire U.S.-Saudi relationship at risk.

“It seems as if things have kind of calmed down” said Gene McGillian, manager of market research at Tradition Energy. “I think we’ve endured a correction in the market and concerns surrounding lost Iranian barrels will re-emerge and the market will stabilize.”

Crude jumped earlier this month as uncertainty persisted over whether the Organization of Petroleum Exporting Countries and its allies can offset supply losses from Iran after sanctions start in November. The gains were supported by U.S.-Saudi tensions after Trump pledged “severe punishment” should the kingdom be linked to Khashoggi’s disappearance. Still, expanding stockpiles and demand concerns have pegged prices back from a fouryear high.

“Stocks are rising in the U.S., and the reason is because pipes out of the U.S. for exports are maxed out while U.S. production is rising,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB.

West Texas Intermediate for November delivery fell $1.10 to end the session at $68.65 a barrel on the New York Mercantile Exchange. Total volume traded was about 5 percent above the 100-day average.

Brent for December delivery fell 76 cents or 0.9 percent to settle at $79.29 a barrel on the London-based ICE Futures Europe exchange. The global benchmark was at a $10.58 premium to WTI for the same month.

Crude stockpiles in the U.S. have risen for four straight weeks, the longest run of gains since early 2017. Inventories in the storage hub of Cushing, Oklahoma, also increased by 1.78 million barrels last week to more than 28 million barrels, the highest level in almost four months.