Oil prices fall on U.S. stock rise, higher supply

Galtero Lara
Julio 18, 2018

Former Shell Oil President John Hofmeister on the outlook for oil prices.

Oil benchmark Brent crude hit a three-month low on Wednesday after a rise in USA crude inventories highlighted increasing global supply and concerns over weak demand.

At 10:27am EDT, both benchmarks were trading down, with WTI trading down 0.77% at $66.64, while Brent crude was trading down 0.86% at $71.54.

The U.S. oil market has been tight this year but data on Tuesday from the American Petroleum Institute showed an unexpected rise of over 600,000 barrels in crude inventories.

Oil markets have fallen over the last week as Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries and Russian Federation have increased production and as some supply disruptions have eased.

The trade war between the United States and China and Libya's unrest that has resulted in a force majeure have also been complicating the market, along with U.S. oil production, which has held steady at 10.9 million bpd for the week ending July 06 and the previous five weeks, after being on a tear for most of the 2018.

But the specter of oversupply quickly returned, with a rise of more than 600,000 barrels in USA crude stockpiles, reported by the American Petroleum Institute late on Tuesday.

More news: Google Hit With Record $5B Fine From EU Over Android Operating System

The benchmarks had steadied after big declines on Monday and last week as supply disruptions in Venezuela came to the fore and as analysts had been forecasting a decline of 3.6 million barrels in United States inventories for the week through July 13.

"Oil is trading lower this morning on the back of the API release, and price action later today will largely depend on what the EIA release", said ING commodities strategist Warren Patterson.

On the demand-side, intensifying risks over trade tensions between the United States and China could drag on the global economic outlook, BMI Research said.

"Ultimately, global inventories are low, oil demand remains robust and we still expect a deficit once U.S secondary sanctions are reintroduced".

Kansas City Federal Reserve Bank President Esther George said on Tuesday uncertainty over US trade policy could slow the economy, even if the recently imposed tariffs in and of themselves are too small to have a big impact.

Trade policy was a "significant" downside risk to the outlook for economic growth, George said.

Otros informes por

Discuta este artículo