Oil Falls Most in Seven Weeks Amid Supply Rise, Trade Impasse

Oil futures fell as much as 2.7% in New York, the biggest intraday decline since Oct. 14.

Jacquelyn Melinek

20 Nov 2019, 04:56 AM IST

Oil Falls Most in Seven Weeks Amid Supply Rise, Trade Impasse

A sample of crude oil sits in a bottle for testing at a multiple well platform, operated by Rosneft PJSC, in the Samotlor oilfield near Nizhnevartovsk, Russia. (Photographer: Andrey Rudakov/Bloomberg)

(Bloomberg) -- Oil dropped the most in seven weeks as American crude stockpiles are forecast to rise and U.S.-China trade talks stall.

Futures fell 3.2% in New York, the biggest decline since Sept. 30. U.S. oil inventories probably rose by 1.5 million barrels last week, according to a Bloomberg survey ahead of a government report on Wednesday. Markets are also being pressured by the impasse in trade discussions between the U.S. and China. While Russia is unlikely to agree to deepen output cuts, it could extend existing curbs to support Saudi Arabia, Reuters reported.

“We are going into this week with another storage build expected in the EIA’s report,” said Bob Yawger, director of futures division at Mizuho Securities USA. “The trade deal has soured and the vibe on the deal has turned a bit negative and that will affect demand too.”

The ebb and flow of trade talks between Washington and Beijing has weighed on oil prices, which have fallen more than 15% from an April peak. The report that Russia isn’t considering deeper cuts follows news of other large producers in OPEC+ who aren’t pushing for deeper oil-supply cuts either, according to delegates across the coalition.

“The market push down was already vulnerable,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “Russia is playing hardball going into an OPEC meeting, but they always do.”

West Texas Intermediate for December delivery fell $1.84 to settle at $55.21 a barrel on the New York Mercantile Exchange. The front-month contract will expire on Wednesday.

Brent for January settlement slipped $1.53 to end the session at $60.91 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $5.56 premium to WTI for the same month.

U.S. crude stockpiles are at the highest level in four months. If official government data confirms the forecast in inventories on Wednesday, it would be the fourth straight weekly advance.

Other oil-market news
Gasoline futures fell 1.1% to close at $1.6037 a gallon. ConocoPhillips announced a 10-year plan to buy back $30 billion of shares, equivalent to about half of its current market capitalization, as the oil producer attempts to distance itself from the troubled U.S. shale industry. Commodities trader Trafigura Group Ltd. had contacts with an ex-Israeli Defence Forces officer who was later sanctioned by the U.S. over alleged arms sales in South Sudan, according to a report by a Swiss NGO. Wall Street banks working on Saudi Aramco’s share sale are set to lose out on a highly-anticipated fee windfall after the deal was pared back from a record global offering to a mainly domestic affair.

Other oil-market news

Gasoline futures fell 1.1% to close at $1.6037 a gallon.
ConocoPhillips announced a 10-year plan to buy back $30 billion of shares, equivalent to about half of its current market capitalization, as the oil producer attempts to distance itself from the troubled U.S. shale industry.
Commodities trader Trafigura Group Ltd. had contacts with an ex-Israeli Defence Forces officer who was later sanctioned by the U.S. over alleged arms sales in South Sudan, according to a report by a Swiss NGO.
Wall Street banks working on Saudi Aramco’s share sale are set to lose out on a highly-anticipated fee windfall after the deal was pared back from a record global offering to a mainly domestic affair.

--With assistance from Kriti Gupta.

To contact the reporter on this story: Jacquelyn Melinek in New York at jmelinek@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick, Mike Jeffers