Unexpected increase in US stocks puts oil under pressure

An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China. Picture: REUTERS/STRINGER/CHINA OUT
An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China. Picture: REUTERS/STRINGER/CHINA OUT

Singapore — Oil prices fell on Wednesday after industry data showed a surprise build in crude oil inventory in the US and as investors waited for news on whether a fresh round of US tariffs on Chinese goods would take effect on Sunday.

Brent futures fell 37c, or 0.6%, to $63.97 a barrel by 1.21am GMT. US West Texas Intermediate (WTI) crude slipped 30c, or 0.5%, to $58.94 a barrel.

“Oil fell from its highest close in almost three months after the API inventory reported a build bearish to consciences while uncertainly over the December tariff deferral added to the soft tone,” Stephen Innes, chief Asia market strategist at AxiTrader, said, referring to US crude’s close on December 10.

US crude stocks clocked a surprise rise in the most recent week while petrol and distillate inventories also rose, data from industry group the American Petroleum Institute shows.

Crude inventories rose by 1.4-million barrels in the week to December 6 to 447-million, while analysts were expecting a fall of 2.8-million barrels.

The weekly EIA report is due later on Wednesday.

The US is on track to become a net exporter of crude and fuel for the first time on record on an annual basis in 2020, the EIA said, due to a production surge that has dramatically reduced its dependence on foreign oil.

Also adding to global supply, US producers ExxonMobil and Hess plan to export the first-ever shipments of crude oil from Guyana between January and February, a milestone for Latin America’s newest oil producer, sources with knowledge of the plans said.

US-China trade tensions continued to cloud demand outlook with a December 15 deadline for the next round of US tariffs on Chinese imports weighing on markets.

Investors are also eyeing other major events this week including the British election on Thursday and US and European Central Bank (ECB) meetings for further trading cues. -Reuters