Oil Falls on Stockpile and Trade Signals
(Bloomberg) -- Oil retreated from a six-week high as investors weigh indications of expanding American crude inventories and mixed signals on the progress of U.S.-China trade talks.
Futures lost as much as 0.7% in New York after rising 5.6% over the past three sessions. The American Petroleum Institute reported crude stockpiles increased by 4.26 million barrels last week, according to people familiar with the data. China is seeking a rollback of U.S. tariffs before signing a deal, while it’s unclear if President Donald Trump will be willing to cut any duties.
While prices have rallied recently on optimism trade tensions are easing, oil is still down from an April peak as the prolonged spat dented demand. OPEC cut its estimates for the amount of crude it will need to pump in coming years as American shale floods the market, while the U.S. registered its first petroleum trade surplus in over four decades as production surged to a record.
“There’s lots of feel-good things with China and the U.S. saying they want to sign a partial deal, but looking beyond the headlines, what exactly are they saying about the removal of tariffs?” said Vandana Hari, founder of Vanda Insights, in a Bloomberg TV interview. “Some of the optimism over the trade deal that is being baked into oil prices might be a bit premature.”
West Texas Intermediate for December delivery lost 28 cents to $56.95 a barrel on the New York Mercantile Exchange as of 7:32 a.m. in London. The contract rose 69 cents to $57.23 on Tuesday, the highest close since Sept. 24.
Brent for January settlement fell 35 cents, or 0.6%, to $62.61 a barrel on the London-based ICE Futures Europe Exchange. The contract rose 83 cents to $62.96 on Tuesday. The global benchmark traded at a $5.61 premium to WTI.
U.S. crude stockpiles at the key storage hub of Cushing increased by 1.25 million barrels last week, according to the API. Nationwide inventories are forecast to expand by 2 million barrels, according to a Bloomberg survey before Energy Information Administration data on Wednesday.
Beijing has asked the Trump administration to pledge not only to withdraw threats of new tariffs but also to eliminate duties on about $110 billion in goods imposed in September, according to people familiar with the deliberations. Negotiators are also discussing lowering the 25% duty on about $250 billion of imports that Trump imposed last year, the people said.
--With assistance from James Thornhill.
To contact the reporter on this story:
Ann Koh in Singapore at firstname.lastname@example.org
To contact the editors responsible for this story:
Serene Cheong at email@example.com
Ben Sharples, Andrew Janes
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.