Oil prices slip on news US stocks rose

London — Oil prices declined on Wednesday, holding below $60 a barrel on data showing a bigger-than-expected rise in US crude stocks, but the prospect of deeper output cuts by Opec and its allies offered support.

Brent crude futures were down 25 US cents, or 0.43%, to $59.45 a barrel at 8.34am GMT.

West Texas Intermediate (WTI) crude futures for December delivery fell 32c, or 0.59%, to $54.16 per barrel. The November contract expired on Tuesday at $54.16.

US crude stocks rose by 4.5-million barrels to 437-million barrels in the week ended October 18, compared with analysts’ expectations for a gain of 2.2-million barrels, data from industry group the American Petroleum Institute showed.

Inventory data from the US Energy Information Administration (EIA) is due later on Wednesday.

Helping underpin prices, Opec is mulling whether to deepen production cuts amid concerns of weak demand growth in 2020. Some analysts were sceptical about Opec’s ability to further cut output.

“It will be a struggle to get members to cut a significant amount more, particularly if you have some members who are not pulling their weight when it comes to cuts,” Dutch bank ING said in a note.

Opec and other oil producers including Russia, a group known as Opec+, have pledged to cut production by 1.2-million barrels per day (bpd) until March 2020. Opec and other non-members are scheduled to meet again from December 5-6.

Meanwhile, easing trade tension between China and the US, the world’s two largest economies and biggest oil consumers, were also helping to cushion overall sentiment for oil, traders said.

US President Donald Trump said earlier this week that efforts to end the trade war with China were going well, a view echoed by Chinese vice-foreign minister Le Yucheng on Tuesday.

“With the headwinds of strong US producer hedging and high freight rates fading, we expect stronger Brent time spreads and higher prices in coming weeks, with upside risk to our year-end $62 per barrel forecast,” Goldman Sachs said in a note.

The investment bank expects Brent prices to continue trading at about $60 a barrel in 2020.

Reuters