Oil prices fall on US crude inventory increase
The US is on track to become a net exporter of crude and fuel for the first time on record on an annual basis in 2020, according to the EIA
London — Oil prices fell on Wednesday after industry data showed an unexpected build in US crude inventories and as investors waited for news on whether a fresh round of US tariffs on Chinese goods would take effect on Sunday.
Brent futures fell 24c to $64.10 a barrel by 9.43am GMT. US West Texas Intermediate (WTI) crude slipped by 19c to $59.05 a barrel.
US crude stocks showed a surprise rise in the most recent week while petrol and distillate inventories also rose, data from industry group the American Petroleum Institute (API) shows. Crude inventories rose by 1.4-million barrels in the week to December 6 to 447-million, while analysts were expecting a fall of 2.8-million barrels.
Data from the weekly Energy Information Administration (EIA) report is due at 3.30pm GMT.
US-China trade tensions continue to cloud the outlook for demand, with a December 15 deadline for the next round of US tariffs on Chinese imports approaching fast.
“The post-Opec bullish jolt is all but a distant memory,” PVM oil market analysts said referring to a decision last week by oil cartel Opec and its allies (Opec+) to deepen supply cuts amid a weak outlook for oil demand growth in 2020. “Oil prices have struggled for traction this week as demand concerns returned to the fore ... The cautionary mood is likely to prevail as investors await fresh cues on the trade front.”
On the supply side, the US is on track to become a net exporter of crude and fuel for the first time on record on an annual basis in 2020, the EIA said, due to a production surge that has dramatically reduced its dependence on foreign oil.
Also adding to global supply, US producers ExxonMobil and Hess plan to export the first-ever shipments of crude oil from Guyana between January and February, sources said.
US oil major Chevron said on Tuesday that it expects to write down the value of its assets by $10bn to $11bn this quarter on the back of lower oil and gas price expectations.
Elsewhere, Venezuela’s crude output in November jumped more than 20% from the prior month to the highest level since the US tightened sanctions on state oil company PDVSA in August, two people with knowledge of PDVSA data said this week.
Investors are also eyeing other major events this week including the British election on Thursday and US and European Central Bank (ECB) meetings.