Oil Falls After Industry Data Show Surprise U.S. Stockpile Gain

Oil slipped in New York, approaching its lowest level in almost a month, after a surprise increase in U.S. crude inventories further allayed concerns of a looming supply crunch.

Futures in New York dropped as much as 1 percent. The American Petroleum Institute was said to report stockpiles rose 629,000 barrels last week, whereas government data due later Wednesday is forecast to show a drop of 4.1 million barrels. Increased output from Saudi Arabia, Iraq and Russia has also given the market relief from fears of losses in Venezuela, Iran and elsewhere.

Crude has retreated about 9 percent in July as an escalating trade conflict between the U.S. and China threatens to derail economic growth and cut demand. Goldman Sachs Group Inc. said price volatility has been fueled by a potential release of crude from America’s emergency stockpile, signs that Saudi Arabia is pumping more and uncertainty over the timing of a possible decline in Iranian exports. Price moves Wednesday will be determined by the stockpile data from the Energy Information Administration, ING Bank NV said.

“The focus of the market has shifted to the bearish side,” said Eugen Weinberg, an analyst at Commerzbank AG. “Right now the market is in search of more negative things for oil and they might be finding them in inventories as well as production data in the U.S.”

West Texas Intermediate crude for August delivery dropped as much as 71 cents to $67.37 a barrel on the New York Mercantile Exchange, and traded at $67.60 as of 8:39 a.m. local time. Total volume traded was about 47 percent below the 100-day average.

Brent for September settlement fell as much as 93 cents to $71.23 a barrel on the London-based ICE Futures Europe exchange, and traded at a $4.88 premium to WTI for the same month. The global benchmark rose 32 cents to $72.16 on Tuesday.

Brent Spread

The Brent market is showing signs of weakness. Front-month Brent futures are trading at a discount to the second-month contract, indicating higher supplies.

U.S. WTI is hovering just above its 100-day moving average after London’s Brent settled below that level on Monday for the first time since March.

While the API data showed an expansion in U.S. crude inventories, it was also said to report that stockpiles at the Cushing hub in Oklahoma fell 1.34 million barrels last week. A Bloomberg survey showed that stockpiles at Cushing probably shrank by 700,000 barrels.

Other oil-market news

A stronger dollar is also weighing on prices. The Bloomberg Dollar Spot Index rose a second day after Federal Reserve Chairman Jerome Powell told a Senate committee that the central bank will continue to gradually raise interest rates. India faces a choice between cooperating with U.S. President Donald Trump on Iranian sanctions or keeping access to cheap supplies and precious foreign exchange. Gasoline futures fell 0.6 percent to $2.0141 a gallon, after gaining 1.2 percent on Tuesday.