Oil prices drop as trade worries overshadow fall in stocks

CNBC

Reuters
KEY POINTS
  • Brent crude was down 18 cents, or 0.3%, at $61.41 a barrel by 0405 GMT after gaining 2 cents on Tuesday.
  • U.S. West Texas Intermediate (WTI) crude was down 27 cents, or 0.5%, at $55.27 a barrel, having dropped 0.5% in the previous session.
GP: US Oil Workers Oil Boom in Texas's Permian Basin 191030
Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Benjamin Lowy | Getty Images

Oil prices fell on Wednesday as a possible delay in resolving the U.S.China trade war overshadowed a drop in U.S. crude inventories.

Brent crude was down 18 cents, or 0.3%, at $61.41 a barrel by 0405 GMT after gaining 2 cents on Tuesday.

U.S. West Texas Intermediate (WTI) crude was down 27 cents, or 0.5%, at $55.27 a barrel, having dropped 0.5% in the previous session.

U.S. crude inventories fell 708,000 barrels in the week ended Oct. 25 to 436 million, compared with analysts’ expectations for an increase of 494,000 barrels, according to data from the industry group, the American Petroleum Institute.

“The market has largely ignored the decline in U.S. crude inventories and assumed the demand side will remain weak in the foreseeable future as the global cyclical slowdown deepens,” said Margaret Yang, market analyst at CMC Markets in Singapore.

“Fading optimism over a U.S.-China phase-one deal further weighed on oil prices as trade risks are set to rise,” she said.

The United States and China were continuing to work on an interim trade agreement, but it may not be completed in time for U.S. and Chinese leaders to sign it next month, a U.S. administration official said.

The latest potential setback in the negotiations stalled a rally in global share markets.

Russia’s deputy energy minister also said on Tuesday it was too early to talk of deeper output cuts by OPEC and its allies, adding to the pressure on the market.

The Organization of the Petroleum Exporting Countries and other producers including Russia — a grouping referred to as OPEC+ — have cut oil output by 1.2 million barrels per day to support prices since January.

In the United States, gasoline stocks dropped by 4.7 million barrels, compared with analyst expectations for a drop of 2.2 million barrels, and distillate stocks were down by 1.6 million barrels, versus an expected fall of 2.35 million barrels.

Still, crude stocks at the Cushing, Oklahoma, delivery hub for WTI rose by 1.2 million barrels, the API said.