Oil Up After Report Indicates Falling US Stockpiles
(Bloomberg) -- Oil climbed after an industry report indicated that U.S. crude inventories fell for the first time in three weeks, countering growing concern that the global economy is headed for recession.
Futures in New York rose as much as 0.6% after rebounding to close up 0.2% in a volatile session on Tuesday. The American Petroleum Institute reported a 3.45 million-barrel draw-down last week, people familiar with the data said. President Donald Trump said Tuesday he could cut taxes without congressional approval as the U.S. economy flashes recessionary warning signs.
Oil has slumped around 15% since late April as the trade war between the world’s two largest economies weighed on demand. Simmering tension in the Middle East and efforts by the Organization of Petroleum Exporting Countries and allied producers to curtail output haven’t been able to arrest the slide.
“After a couple of surprise builds in the inventory, the drawback will certainly help support sentiment,” said Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “But the market is definitely taking the glass-half-empty type approach to data” due to fears about the trade war and slowing growth, he said.
West Texas Intermediate crude for October delivery added 20 cents, or 0.4%, to $56.33 a barrel on the New York Mercantile Exchange at 7:28 a.m. in London after being up as much as 31 cents earlier. The September contract settled 13 cents higher at $56.34 as it expired on Tuesday.
Brent for October settlement climbed 35 cents, or 0.6%, to $60.38 a barrel on the ICE Futures Europe Exchange after closing up 0.5% on Tuesday. The benchmark crude traded at a premium of $4.04 to WTI.
The decline in U.S. stockpiles in the API data is more than double the 1.5 million barrel drop forecast in a Bloomberg survey. Inventories at the storage hub of Cushing, Oklahoma, fell by 2.8 million barrels, the API said, which would be the biggest decrease since February 2018 if confirmed by the official Energy Information Administration figures that are due later on Wednesday.
There’s a 35% chance the U.S. economy will enter a recession in the next year, according to economists surveyed by Bloomberg. U.S. Secretary of State Mike Pompeo took a shot at Huawei Technologies Co. and other Chinese companies on Tuesday, telling CNBC that they are threats to national security, as trade negotiations with Beijing continue.
“The ambiguity around the trade talks continues, and it’s really difficult to get a read on where the market is,” ANZ’s Hynes said.
--With assistance from James Thornhill.
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