Oil Snaps 3-Day Gain as Demand Outlook Dented
(Bloomberg) -- Oil snapped a three-day gain as a sell-off in risk assets added to lingering trade tensions to dent the demand outlook, countering a forecast decline in U.S. crude stockpiles.
Futures slid as much as 0.8% in New York after rising 7.5% the past three days. Asia stocks fell, while the dollar firmed, making commodities priced in the U.S. currency less attractive to investors. American inventories probably dropped by about 2.3 million barrels last week, according to the median estimate in a Bloomberg survey before Energy Information Administration data Wednesday.
Oil is still down more than 6% so far this month as fears the U.S.-China trade war will escalate and dent demand overshadow concerns energy flows from the Middle East may be disrupted. Russia aims to continue its cooperation with the Organization of Petroleum Exporting Countries in the interests of the oil market, the nation’s energy ministry said in a statement, adding that growing uncertainties about the trade dispute is having an impact.
“There’s still a lot of uncertainty lying ahead because of the U.S. and China’s trade war developments,” said Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp. “Oil is pacing itself on demand fears after rallying from the possibility of tighter supply.”
West Texas Intermediate crude for September delivery fell 33 cents, or 0.6%, to $54.60 a barrel on the New York Mercantile Exchange as of 8:08 a.m. London time. The contract advanced 43 cents to settle at $54.93 on Monday, the highest close since Aug. 2.
Brent for October settlement lost 39 cents, or 0.7%, to $58.18 on the ICE Futures Europe Exchange. The contract closed little changed on Monday after rising 4.1% in the past two sessions. The global benchmark crude traded at a $3.66 premium to WTI for the same month.
Hong Kong bore the brunt of the sell-off as Chief Executive Carrie Lam warned the city risked sliding into an “abyss.” In Japan, the benchmark gauge erased this year’s gain, while the dollar rose.
U.S. crude stockpiles unexpectedly rose by 2.4 million barrels in the week ended Aug. 2, rising from the lowest level since November for the first gain in eight weeks. Of the eight analysts polled in the survey, six predicted a decline through Aug. 9, while two forecast a gain.
--With assistance from James Thornhill.
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