Oil prices dropped on Wednesday, pulled down by a larger-than-expected build-up in U.S. crude stocks. This is after acquiring three sessions on anticipations of an easing of U.S.-China trade tensions.
Brent crude futures were at $62.60 a barrel, down 36 cents, or 0.6%. Also, Brent remained by 1.3% on Tuesday.
The U.S. WTI crude futures dropped 29 cents, or 0.5%, to $56.94 per barrel. It closed 1.2% in the recent session.
The U.S. crude inventories surged by 4.3 million barrels in the week ended Nov. 1 to 440.5 million barrels. That was almost triple analysts’ forecast for a rise of 1.5 million barrels.
EIA’s official data is due later today, according to ANZ researcher.
OANDA senior analyst said Asia is more discreet about oil, and bearish news was not given attention.
However, hopes remain for a breakthrough on trade in talks between the U.S. and China, keeping oil price drops in check.
China is pushing U.S. President Trump to decrease more tariffs set on Beijing as part of a ‘Phase One’ trade deal.
OPEC’s Secretary-General said next year’s oil market vision might have upside potential.
Moreover, in the next five years, OPEC would supply a lowering amount of oil. It will be squeezed by increasing U.S. sale production and other rival sources.
OPEC and its partners agreed to cut oil output by 1.2 million barrels per day until March 2020. They will meet in early December to review the production policy.
Meanwhile, in the U.S., crude stockpiles surged by 2 million barrels last week. The industry-funded API released its weekly oil inventory report on Tuesday.
Oil Prices Rises to Six-Week High Amid U.S.-China Trade Deal
Crude surged to the peak level in six weeks as shareholders stayed optimistic that the U.S. and China are near in signing the deal.
China’s president is willing to meet his counterpart Trump to sign the ‘Phase One’ of a trade deal.
Futures surged 1.2% in New York on Tuesday.
Senior market strategist at RJ O’Brien & Associates said the U.S. seems more willing to roll back existing tariffs. Also, they are talking about it and looking to get something done for this Phase-One deal to move oil. He added that if everything remains the course and nothing changes to trade deal, buying an interest in the market will continue.
Crude is still below about 14% from the highest level at the end of April. The spat between Beijing and Washington threatened the demand-growth outlook. Also, OPEC cut its measures for the amount of oil it will need to pump in the coming years. OPEC will also need to project that its share of world markets will decrease amid a flood of U.S. shale supply.
China is seeking to decrease U.S. tariffs as much as $360 billion of Chinese imports before President Xi agrees to sign a partial deal.
Negotiators asked the Trump administration to remove tariffs in about $110 billion in goods imposed in September. Also, the tariff rate will lower for about $250 billion that began last year.
West Texas Intermediate for December delivery added 69 cents to settle at $57.23 a barrel on the NYME.
Brent for January settlement sharpen higher by 83 cents to end the session at $62.96 on the ICE Futures Europe Exchange. Also, the global benchmark crude traded at a $5.67 premium to WTI for January.
Brent’s nearest time spread traded in its strongest backward since September, an indication of tight supply.