Oil prices down on rise in US crude stock pile
US crude inventories are expected to rise in weekly reports; prices were also weighed by pessimism over the US-China trade deal
London — Oil slipped towards $61 a barrel on Monday, falling for a second day, pressured by expectations for a rise in US crude inventories and fading optimism over a US-China trade deal.
US crude inventories are expected to have risen by about 700,000 barrels last week, according to a Reuters poll of analysts. The first of two weekly supply reports, from the American Petroleum Institute (API), is due at 8.30pm GMT.
Brent crude was down 54c at $61.03 a barrel at 10am GMT, having fallen 45c on Monday. US West Texas Intermediate (WTI) crude was down 42c to $55.39.
Last week, Brent rose by more than 4%, supported by a drop in US inventories and signs of an easing in the US-China trade dispute. This has been weighing on prices for months because of concern it will hit economic growth and demand.
“[US President Donald] Trump and his team have repeatedly stressed the progress made in recent days and the prospect of it being wrapped up earlier than anticipated, although by now we should take this kind of rhetoric with a pinch of salt,” said Craig Erlam, an analyst at broker Oanda.
“Brent found resistance around $62 but that may prove temporary if trade headlines continue to improve and central banks keep slashing interest rates.”
The US Federal Reserve is expected to cut rates when it concludes its two-day meeting on Wednesday. Investors will also be watching for any indication that further cuts are likely.
“A cautious market sentiment remains in place, with optimism from last week’s progress on a China-US trade deal ebbing away,” said analysts at JBC Energy in a report.
BP CFO Brian Gilvary was cautious on the outlook for prices, telling Reuters on Tuesday that Brent was “finely balanced” at about $60 with more downside than upside risk. He was speaking after BP reported a drop in profit due to lower oil prices.
After the API report, focus will be on official inventory figures from the Energy Information Administration (EIA) due on Wednesday.
Brent has gained 14% in 2019, supported by a deal to cut supply by 1.2-million barrels per day (bpd) between the oil cartel Opec and allies, including Russia.
The producers meet on December 5-6 to decide whether to extend or adjust the decision, which runs until March. The prospect they could deepen the supply cut has also supported prices.
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