US oil glut keeps pressure on prices
Oil prices extended losses Wednesday after a steep US crude inventory build added to worries about a possible delay in resolving the US-China trade war, which has hurt global oil demand.
Brent crude LCOc1 fell 30 cents, or 0.5pc, to $61.29 a barrel by late afternoon in Europe. US West Texas Intermediate crude was down 67 cents, or 1.2pc, at $54.87 a barrel.
US crude oil stockpiles soared last week amid higher imports and a release from national reserves, while gasoline and distillate inventories extended their declines even as refiners ramped up production, the Energy Information Administration (EIA) said.
Crude inventories, excluding the Strategic Petroleum Reserve (SPR), rose 5.7 million barrels, the EIA said, compared with analysts' expectations for a 494,000-barrel build and a 708,000-barrel decline reported by industry group the American Petroleum Institute late Tuesday.
"A strong rebound in Canadian imports and another SPR release has encouraged a build to crude inventories," said Matt Smith, director of commodity research at Clipper Data. "Tempering the bearish influence of the solid crude build are draws to both distillates and gasoline amid a tick higher in implied demand."
Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose for a fourth straight week, gaining 1.6 million barrels last week, EIA data showed, dragging on futures prices for the benchmark.
"Stocks at the WTI delivery hub have been trending higher since late September, which has put pressure on the prompt WTI time spreads, with the December/January spread this month having shifted from backwardation to contango," Dutch bank ING said in a note.
The United States and China were continuing to work on an interim trade agreement, but it may not be completed in time for US and Chinese leaders to sign it next month, a US administration official said.
"Selling came courtesy of the fading optimism over trade and a Fed rate cut. Risk assets were dealt a blow as market players worried that the US and China would delay settling their trade differences," said PVM analyst Stephen Brennock.