NEW YORK: Oil fell about 1pc on Wednesday after a report showing US crude inventories grew unexpectedly last week and gasoline stocks surged, but optimism that a US-China trade deal would be reached soon limited losses.
Brent crude futures LCOc1 fell 45 cents, or 0.7pc, to $63.82 a barrel by 11:27am EST (1627 GMT). US West Texas Intermediate crude CLc1 fell 61 cents, or 1pc, to $57.80 a barrel.
US crude stocks swelled by 1.6 million barrels last week as production hit a record high at 12.9 million barrels per day and refinery runs slowed, the Energy Information Administration said. Analysts in a Reuters poll had forecast a drop of 418,000 barrels.
The more bearish news from the EIA was that U.S. gasoline inventories soared 5.1 million barrels, compared with expectations for a 1.2 million-barrel gain.
US gasoline futures RBc1 dropped 3.63 cents, or 2.1pc, to $1.67 a gallon.
“The report was somewhat bearish with the across-the-board inventory increases, most notably the 5 million-barrel increase in gasoline inventories,” John Kilduff, a partner at Again Capital Management in New York. “That rise came despite continued strong demand and a down tick in the refinery utilization rate.”
Hopes that Beijing and Washington would strike a trade deal limited losses in oil.
Prices had risen for the last two days on expectations that China and the United States, the world’s two biggest crude users, would soon sign a preliminary agreement, signalling an end to their 16-month trade dispute.
“Trade deal optimism persists,” said Tamas Varga of oil broker PVM. “The belief in a positive trade deal continues unabated.”
That was fueled by comments from US President Donald Trump on Tuesday, who said the United States and China were close to an agreement after top negotiators spoke by telephone and agreed to keep working on remaining issues.
Expectations that the Organization of the Petroleum Exporting Countries and allies such as Russia will maintain their deal to restrain supply have supported prices.
The producers, known as OPEC+, hold their next oil policy review meetings on Dec. 5-6 in Vienna. They are expected to extend their supply cut agreement further into 2020.