Crude Pushes Higher After Report Shows Gasoline Stocks Decline
(Bloomberg) -- Oil rose after a U.S. industry report signaled a shrinking gasoline surplus, despite uncertainty over OPEC’s appetite for production cuts.
Futures rose 0.9 percent at 4:50 p.m. New York time on Tuesday after dipping close to a 13-month low in earlier trading. The industry-backed American Petroleum Institute was said to report U.S. gasoline inventories fell by 2.6 million barrels last week, even as oil stockpiles rose for a 10th straight week, according to people familiar with the data.
Crucial supply and demand questions will come to the fore at a pair of gatherings over the next two weeks: the Group of 20 meeting in Argentina and an Organization of Petroleum Exporting Countries event in Vienna.
“Oil traders are very nervous right now,” said Phil Flynn, senior market analyst at Price Futures Group. “The market’s been beat up so bad and the big question is can we hold $50? We are definitely in a downtrend.”
U.S. President Donald Trump added to fears about slackening demand earlier in the day, telling the Wall Street Journal that he’ll likely go ahead with plans to increase tariffs on $200 billion of Chinese goods if talks with Chinese leader Xi Jinping fail to reach a trade deal.
America’s unexpected sanctions waivers for Iranian oil, record Saudi output and rising trade tensions have sent crude into a bear market. While Saudi Arabia wants a production cut to support prices, the market is abuzz with talk that Crown Prince Mohammed Bin Salman may not be able to defy Trump’s call for lower prices after the White House supported the Saudi price following the killing of Jamal Khashoggi.
West Texas Intermediate crude for January rose 45 cents to $52.08 on the New York Mercantile Exchange after the API figures were reported. WTI had settled down 7 cents at the official end of trading earlier in the day.
Brent for January settlement gained 32 cents to $60.80 on London’s ICE Futures Europe exchange, after closing at a 27-cent loss. The global benchmark traded at an $8.85 premium to WTI.
The Bloomberg Dollar Spot Index gained as much as 0.3 percent on Tuesday, weighing on investors’ appetite for commodities priced in the greenback.
The API also was said to report crude stockpiles rose by 3.45 million barrels, well above the 700,000-barrel gain predicted by the median estimate in a Bloomberg survey. Official numbers from the U.S. Energy Department are due on Wednesday.
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