Oil traded near $53/bbl after an industry report showed a sharp jump in U.S. inventories, adding to concern that supply keeps growing while demand ebbs.
Futures were down 0.2% in New York, paring earlier losses of as much as 1.1% after the European Union and the U.K. reached an agreement on Brexit. 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 official Energy Information Administration figures due Thursday.
The Organization of Petroleum Exporting Countries 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 U.S., 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.
“Oil prices are facing headwinds from the unexpectedly marked 10.5 million bbl increase in U.S. crude oil stocks last week, as reported by the API after close of trading yesterday evening,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.
West Texas Intermediate for November delivery dropped 10 cents, or 0.2%, to $53.26/bbl on the New York Mercantile Exchange as of 10:43 a.m. in London. The contract added 55 cents on Wednesday, its first gain in three days.
Brent crude for December settlement was little changed at $59.42 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $5.97 to WTI for the same month.
If the EIA data also shows an increase in U.S. 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.
© 2019 Bloomberg L.P.