Oil Slips Back After API Reports Larger-Than-Expected Stock Gain
Futures in New York edged higher after dropping 3.5% over the previous two sessions.
(Bloomberg) -- Crude oil gave back some of its gains after a report showed inventories rising more than 10 million barrels, dimming the market’s optimism after signs that the trade war between the U.S. and China may be nearing an end.
Futures eased back to $53 a barrel after settling 1% higher. The industry-funded American Petroleum Institute reported a 10.5 million-barrel build in crude stocks, according to people familiar with the data. It would be the largest jump since February 2017 if government data confirms it Thursday. U.S. President Donald Trump said China already has started buying American agricultural products but that a formal deal probably won’t be signed until a meeting next month with Chinese President Xi Jinping.
“The 10.5 million-barrel build caused the price dip,” said Gene McGillian, manager of market research at Tradition Energy. “It brought some sellers into the market. Now we need to wait to see if the EIA confirms it.”
European and British negotiators appeared be nearing an accord that would pave the way for the world’s fifth-largest economy to exit the EU. In addition, a weaker U.S. dollar spurred demand for riskier assets including commodities such as oil.
“The encouraging headlines surrounding the U.S.-China trade war and Brexit seem more optimistic,” said Pavel Molchanov, a Houston-based analyst at Raymond James & Associates Inc. “In that sense, it’s perfectly reasonable for oil prices to show a bit of a bounce.”
West Texas Intermediate for November delivery was 16 cents higher at $52.97 a barrel on the New York Mercantile Exchange at 4:49 p.m. local time, after settling at $53.36.
Brent crude for December settlement was 36 cents higher at $59.10 on the London-based ICE Futures Europe Exchange. The global benchmark settled at a premium of $5.97 to WTI for the same month.
“But the main focus will still be on demand destruction despite the earlier drive higher. Even despite the drive higher. How the trade talks are going to end up and what economic data shows. Whether its going to be slowing the world economy,” McGillian said.
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To contact the reporters on this story: Jacquelyn Melinek in New York at jmelinek@bloomberg.net;Sheela Tobben in New York at vtobben@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick
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