Oil prices extend losses on supply, trade war fears
Oil prices slipped for a third day on Wednesday as a surge in U.S. stocks reinforced concerns about lacklustre global economic growth, while hopes ebbed for any movement on the U.S.-China trade war.
West Texas Intermediate crude futures erased early gains to trade down 17 cents, or 0.31%, at $55.04 a barrel by 0930 GMT. Brent crude futures were at $60.70 a barrel, down 21 cents, or 0.34%.
Crude inventories in the United States rose by 6 million barrels last week to 445.9 million, the American Petroleum Institute, an industry group, said on Tuesday.
“The API data … showed U.S. inventories posted a rather robust increase last week, which if confirmed by the EIA report, could see oil prices continue to slide,” said Edward Moya, an analyst at brokerage OANDA.
Official U.S. government inventory data from the Energy Information Administration is due at 10:30 a.m. EST (1530 GMT) on Wednesday.
Concerns also remain over a potential oversupply of oil worldwide after Reuters reported that Russia, the world’s second-biggest producer, was unlikely to back deepening output cuts when the Organization of the Petroleum Exporting Countries meets on Dec. 5-6 in Vienna.
Russia and other oil producers have agreed with OPEC to cut 1.2 million barrels per day of output through March to bolster prices.
“This headline had bulls running for the exit, but the practical impact should not be overly concerning,” said Tamas Varga of oil brokerage PVM.
“This partnership will not require Russia to commit to deeper cuts, only to stick with the current one.”
U.S. crude demand has slowed during a protracted trade war with China. Hopes for an end to the dispute in the signing of a so-called Phase One agreement have dimmed amid disagreements over the removal of tariffs.
China on Wednesday also condemned legislation passed by the U.S. Senate aimed at protecting human rights in Hong Kong amid a crackdown on a pro-democracy protest movement.
“(The) fear here is still the trade talks with a lot of pessimism starting to filter through,” said Stephen Innes, market strategist at AxiTrader. “If we don’t get a significant roll-back on tariffs, that’s quite negative.”
Source: Reuters (Additional reporting by Seng Li Peng; Editing by Dale Hudson)