Oil prices steady despite rising US crude oil stocks

London — Oil prices were broadly steady on Thursday despite bearish signals from rising US crude oil stocks and weak factory activity in China.

Brent crude futures were down 4c at $60.57 a barrel by 10.24am  GMT, erasing earlier gains. They had dropped by 1.6% on Wednesday and the contract is set for a monthly decline of about 0.4%.

US West Texas Intermediate (WTI) crude futures were down 14c at $54.92. On the month, however, they are set for a rise of about 1.4%, their biggest monthly gain since June.

Factory activity in China shrank for a sixth straight month in October while growth in the country’s service sector was its slowest since February 2016, official data showed on Thursday.

A protracted trade war between China and the US has been weighing on the demand outlook for oil.

Releasing third-quarter results, Royal Dutch Shell warned that uncertain economic conditions could slow its $25bn share buyback programme, the world’s largest, and have led to a downward revision to its oil price outlook.

The US Federal Reserve cut interest rates for a third time this year on Wednesday, looking to bolster economic growth with a move that could also boost demand for crude. Yet gains are likely to be capped until inventories start to show sustained declines.

US crude inventories rose by 5.7-million barrels in the week to October 25, the US Energy Information Administration (EIA) said on Wednesday, compared with analyst expectations for an increase of 494,000 barrels.

Crude stocks at the Cushing, Oklahoma, delivery hub for US crude futures rose for a fourth straight week, gaining 1.6-million barrels last week, the EIA said.

“The US stock report was anything but encouraging,” PVM analysts said in a note. The American Petroleum Institute (API) had previously reported a decline of 708,000 barrels, raising hopes that official figures would also show a fall.

Cushioning the bearish crude data, the EIA showed petrol and distillate inventories continued to draw.

Reuters