Surge in US oil stocks pushes prices down

London — Oil prices slipped for a third day on Wednesday as a surge in US stocks reinforced concerns about lacklustre global economic growth, while hopes ebbed for any movement on the US-China trade war.

West Texas Intermediate crude futures erased early gains to trade down 17 US cents, or 0.31%, at $55.04 a barrel by 9.30am GMT. Brent crude futures were at $60.70 a barrel, down 21c, or 0.34%.

Crude inventories in the US rose by six-million barrels last week to 445.9-million, the American Petroleum Institute, an industry group, said on Tuesday.

“The API data … showed US inventories posted a rather robust increase last week, which if confirmed by the EIA report, could see oil prices continue to slide,” Oanda analyst Edward Moya said.

Official US government inventory data from the Energy Information Administration is due at 3.30pm GMT on Wednesday.

Concerns also remain over a potential oversupply of oil worldwide after Reuters reported that Russia, the world’s second-biggest producer, was unlikely to back deepening output cuts when Opec meets from December 5-6 in Vienna.

Russia and other oil producers have agreed with Opec to cut 1.2-million barrels per day of output through March to bolster prices.

“This headline had bulls running for the exit, but the practical impact should not be overly concerning,” PVM analyst Tamas Varga said.

“This partnership will not require Russia to commit to deeper cuts, only to stick with the current one.”

US crude demand has slowed during a protracted trade war with China. Hopes for an end to the dispute in the signing of a so-called phase one agreement have dimmed amid disagreements over the removal of tariffs.

China on Wednesday also condemned legislation passed by the US. Senate aimed at protecting human rights in Hong Kong amid a crackdown on a pro-democracy protest movement.

“The fear here is still the trade talks, with a lot of pessimism starting to filter through,” said Stephen Innes, market strategist at AxiTrader. “If we don’t get a significant rollback on tariffs, that’s quite negative.”

Reuters