Oil prices slump as unforeseen development heighten US crude inventory-Reports
Oil prices slump on Wednesday after industry data showed an unexpected heighten in the United States crude inventory, as investors waited for news on whether a fresh round of US tariffs on Chinese goods would take effect at the weekend.
Brent futures fell by 44 cents to $63.90 per barrel, while US West Texas Intermediate crude fell by 33 cents to $58.91 a barrel, down from a more than two month high reached on Tuesday.
Oil risk Manager, Japanese trading house, Tony Nunan said, everyone was expecting that they would have strong draws in the inventory, but it was a build-up.
The Daily Times gathered that, data from industry group, the American Petroleum Institute shows stocks recorded a surprise increase in recent week, while gasoline and distillate inventories also rose.
Crude inventories rose by 1.4 million barrels in the week to Dec. 6 to 447 million, while analysts were expecting a fall of 2.8 million barrels.
The trade war between US and China continues, as tensions continue to cloud the outlook for demand, with a Dec. 15 deadline for the next round of US tariffs on Chinese imports approaching fast.With the market expected to be oversupplied next year on growing shale oil output and new projects coming on stream, any additional tariffs will dent demand and, in turn, prices, said Mitsubishi’s Nunan.
“The big question is how will the demand hold up?” he said.
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Daily Times learnt that the demand slowdown in growth, a lot of it seems to be coming from the (US-China) trade war. If tariffs go into effect, sentiments will turn bearish again.
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 Exxon Mobil Corp and Hess Corp plan to export the first-ever shipments of crude oil from Guyana between January and February, a milestone for Latin America’s newest oil producer, sources with knowledge of the plans said.
