Oil Erases Earlier Gain on Markets Slump and Inventory Build

Futures in New York were down 0.6% after earlier climbing towards $80 a barrel. The dollar jumped and equity markets fell as investors weighed the outlook for economic growth before a key U.S. employment report, hampering crude prices. The American Petroleum Institute also reported a rise in U.S. crude stockpiles ahead of government inventory figures later.

Saudi Aramco, which says the gas crunch is already boosting oil demand, cut prices for all its crudes destined for Asia. At least four Asian buyers will request full supply of November-loading cargoes, according to people at refineries who asked not to be identified due to the sensitivity of the negotiations. The nominations are due on Wednesday.

Oil had closed at the highest since 2014 on Tuesday as surging natural gas prices spurred greater demand for crude and oil products ahead of winter, while OPEC+ continues to keep output relatively restrained. Goldman Sachs Group Inc. predicted an extra 650,000 barrels a day of demand later this year as utilities wrestling with high natural gas prices switch to oil, while spiking coal prices have added to the energy squeeze.

“Obviously inventory data over the last 24 hours was not supportive,” said Giovanni Staunovo, commodity analyst at UBS Group AG. “A stronger dollar and risk-off environment are also not of help.”

If the API figures are confirmed by government data Wednesday, it would be a second weekly gain. U.S. gasoline stockpiles rose by around 3.7 million barrels, while distillate inventories grew by 345,000 barrels, the API said.