Oil prices dropped on after an industry forecast showed an unexpected rise in U.S. crude inventories. Contrarily, the interim of phase one of a U.S.-China trade agreement clinches a deeper cut in prices.
International benchmark Brent crude future fell 19 cents, or 0.3%, to $64.08 a barrel. Also, Brent increased by about 1% on Tuesday.
West Texas Intermediate crude futures dropped 17 cents, or 0.29%, to $58.24 a barrel.
Wednesday’s decrease reversed two days of increase with WTI jumping 1.1% through Tuesday. Besides, Brent increased 1.4% during the time of the expectation that China and the U.S. would make interim an initial deal that will end their trade war.
United States crude stocks increased by 3.6 million barrels in the week to Nov. 22 to 449.6 million. This is contrary to analysts’ expectations for a fall of 418,000 barrels, according to the data of API.
Stephen Innes of AxiTrader said the sudden crude builds disappointed the oil bulls and possibly encouraged day position squaring.
Contrary, oil prices continue to be driven by U.S.-China trade news flow, which stays encouraging more after President Trump sounded positive. He hinted that a deal is just around the corner.
China and the United States are nearing a deal on phase one of a trade deal, according to President Trump. The U.S. and China spoke by telephone, and both agreed to keep working on their issues.
The trade truce between Washington and Beijing clouded the vision for future oil demand. Also, even the deal is not yet concluded; any optimist headline tends to support the market.
The OPEC+ group agreed to decrease oil production by 1.2 million barrels per day until March 2020 to increase prices. The policy will extend likely until June.
Oil Prices Fell Amid Increasing Crude Stockpiles
Oil prices traded lower in Asia after the API forecast that U.S. oil inventories increased last week.
U.S Crude oil WTI futures fell 0.2% to $58.30. Also, international Brent oil futures dropped 0.2% to $63.09.
The American Petroleum Institute reported that crude inventories surged by around 3.6 million barrels for the week of Nov. 22.
Analysts are expecting the U.S. EIA’s weekly inventory data to show a drop of 418,000 barrels in crude stocks for the week of Nov. 22.
Next week’s OPEC meeting will be in the spotlight as it is widely expected to extend the output cut deal to June or the end of 2020. Some analysts assume OPEC and Russia could decline output even more.
John Kilduff of Again Capital said it is not a surprise if Saudis go for more output cuts, to toughen the market even more than they already have. Also, Saudi Arabia may be driven to push oil prices higher to the Aramco offering.
Russia is finding a way to limit participation since they are not happy with the deal.
Kilduff said the Russian intentions would be a vital aspect of it for the future, especially they want some wiggle room on the condensate and possibly produce more.
OPEC+ and Russia have an ongoing deal to reduce production by 1.2 million barrels a day.
The OPEC and its allies in an output cutting pact will start holding a meeting on Dec. 4 in Vienna to examine its policy.
OPEC plans to meet on Dec. 5, and then the OPEC+ group on Dec. 6 will make a final announcement on the future policy.