Picture: 123RF/PIX NOO
Picture: 123RF/PIX NOO

London/Seoul — Oil prices fell on Wednesday, pulled down by a larger-than-expected build in US crude stocks and weak eurozone economic figures, after gaining for three sessions on expectations of an easing in US-China trade tensions.

Brent crude was down 43c, or 0.7%, at $62.53 a barrel by 10.10am GMT. West Texas Intermediate (WTI) crude fell 34c, or 0.6%, to $56.89 a barrel.

US crude inventories rose by 4.3-million barrels in the week ended November 1 to 440.5-million barrels, the American Petroleum Institute (API) said on Tuesday. That was nearly triple analysts’ forecast for an increase of 1.5-million barrels.

Official data from the US government’s Energy Information Administration (EIA) is due later on Wednesday.

“Oil prices are slightly under pressure following API’s larger-than-expected crude build on Tuesday. Market participants will closely monitor if the build is confirmed by the EIA later today, considering that, last week, the API had a crude draw and the EIA a crude build,” said Giovanni Staunovo, oil analyst for UBS.

The US and China, the world’s two biggest oil consumers, are working to narrow their differences enough to sign a phase one trade deal possibly in November to resolve a trade war that has slowed global growth.

Data on Wednesday showed that Germany’s services sector barely grew in October, while eurozone business activity expanded slightly faster than expected in October, but remained close to stagnation.

Adding to Middle East tensions, Iran has started injecting uranium gas into centrifuges at an underground nuclear facility, further distancing itself from a 2015 nuclear deal between Tehran and world powers that curbed its atomic work.

Last year, US President Donald Trump exited the deal and renewed sanctions on Tehran, slashing Iran’s economically vital crude oil sales by more than 80%.

“Alongside the continued rolling back of its nuclear commitments, the [oil cartel] Opec nation may be tempted to cause further supply disruptions in the Middle East in a bid to drive up prices,” PVM analyst Stephen Brennock said.

“Accordingly, conditions are ripe for tensions in the region to escalate and for the geopolitical risk premium to strike back with a vengeance.”

Reuters