Oil Down as US Stockpiles Rise
(Bloomberg) -- Oil declined as an industry report showed American crude stockpiles expanded, paring a rally that was fueled by signs the U.S.-China trade deadlock may be easing.
Futures dropped as much as 1.4% in New York, snapping a four-day gain. Crude inventories rose by 3.7 million barrels last week, the American Petroleum Institute was said to report. If confirmed by government data Wednesday, it will be a second weekly increase, while a Bloomberg survey predicts a draw in stockpiles. Oil surged 4% on Tuesday after the U.S. postponed tariffs on some Chinese goods, offering a glimmer of hope for global demand.
Oil has whipsawed between gains and losses this month as concerns about the impact of the U.S.-China trade war compete with a pledge from Saudi Arabia to stem the price rout. Washington said it was delaying until mid-December the tariff on some Chinese-made products, while phone talks between the two sides are scheduled in two weeks.
“It is difficult for any meaningful rally in this risk-off environment and the potential increase in U.S. inventories adds further bearishness,” said Howie Lee, a Singapore-based economist at Oversea-Chinese Banking Corp. “We have been here before -- the on-off trade talks -- and everyone remains skeptical.”
West Texas Intermediate crude for September delivery fell 63 cents, or 1.1%, to $56.47 a barrel on the New York Mercantile Exchange as of 7:44 a.m. London time. The contract surged $2.17 to settle at $57.10 on Tuesday, the biggest advance since July 10.
Brent for October settlement decreased 48 cents, or 0.8%, to $60.82 on the ICE Futures Europe Exchange. The contract closed 4.7% higher Tuesday, the largest gain since Dec. 26. The global benchmark crude traded at a $4.36 premium to WTI for the same month.
U.S. crude stockpiles unexpectedly rose by 2.4 million barrels in the week ended Aug. 2, climbing from the lowest level since November for the first gain in eight weeks. The median estimate in the Bloomberg survey forecasts the Energy Information Administration will report a decline of 2.5 million barrels for the week ended Aug. 9, with 11 of the 13 analysts forecasting a drop.
President Donald Trump bowed to pressure from U.S. businesses and concerns over the economic fallout of his trade war with China, delaying the imposition of new duties on a wide variety of consumer products such as toys and laptops until December.
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