Oil fell again on signs that U.S. crude inventories jumped last week, worrying investors that supplies are swelling at the same time a trade war threatens demand.
Futures slipped as much as 1.3% in New York to trade under $53 a barrel, not far from the four-month low touched on Monday. The American Petroleum Institute reported U.S. crude stockpiles rose by 3.55 million barrels last week, according to people familiar with the data. That suggests government statistics due later Wednesday may show a bigger decline than the 2 million barrels analysts have predicted.
Oil is on the edge of a bear market after falling almost 20% from a peak in late April as an aggressive U.S. trade policy stokes fears the global economy is heading for a sharp slowdown. This has made it likely that the Organization of Petroleum Exporting Countries and its allies will extend production curbs beyond June.
“Selling pressures are returning to the fore,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London. “Swelling U.S. oil inventories represent a major headache for those of a bullish disposition.”
WTI for July delivery fell 41 cents, or 0.8%, to $53.07 a barrel on the New York Mercantile Exchange at 10:40 a.m. in London after dropping as much as 71 cents earlier. As of Tuesday’s close, it had lost about 19% from a high reached on April 23.
Brent for August settlement dropped 13 cents, or 0.2%, to $61.84 a barrel on London’s ICE Futures Europe exchange. The contract climbed 69 cents to $61.97 on Tuesday. The global benchmark crude was trading at a premium of $8.60 to WTI for the same month.
The API data also showed a combined 9 million barrel increase in distillates and gasoline stockpiles. If the rise in U.S. crude inventories is confirmed by Energy Information Administration figures, that will be the third increase in four weeks.
Other oil-market news: America’s largest oil hub in Cushing, Oklahoma, is growing even as producers and traders look to move surging West Texas production to the coast for export. Just as Nigeria gets to grips with militants who brought the nation’s oil industry to its knees a few years ago, another group of longstanding foes are slowly making a comeback: thieves. Given the magnitude of the drop in prices, Saudi Arabia may now need to cut even deeper, according to Helima Croft, chief commodities strategist at RBC Capital Markets. Germany hasn’t released emergency oil stocks in response to the Druzhba pipeline contamination crisis and has no plan to do so.