SINGAPORE: Oil retreated on Wednesday after rising more than 1% in the previous session as U.S. industry data showed a surprise build in crude stocks, but hopes for firmer demand next year checked a deeper fall in prices.
A “phase one” U.S.-China trade deal announced last week has helped ward off some pressure from the oil market, dampened by worries over the economic impact of a prolonged dispute between the world’s two biggest oil consumers.
Brent crude futures LCOc1 dropped 21 cents, or 0.32%, to $65.89 a barrel by 0110 GMT on Wednesday. The international benchmark rose 1.2% to $66.10 a barrel on Tuesday. West Texas Intermediate (WTI) crude futures CLc1 fell 31 cents, or 0.51%, to $60.63 per barrel.
“The sizzling oil market rally came to a grinding halt after an unexpected climb in the weekly U.S. crude inventory report,” said Stephen Innes, market strategist at AxiTrader. However, he added “it’s unlikely to be a game-changer.”
“Investors have transcended the trade deal inspired relief rally euphoria and are now banking on a fundamental demand-driven shift that could quicken the pace of the oil market rebalancing in the first quarter of 2020.”
U.S. crude inventories climbed 4.7 million barrels in the week to Dec. 13 to 452 million, compared with analysts’ expectations for a draw of 1.3 million barrels, data from industry group the American Petroleum Institute showed. Inventory data from the U.S. Energy Information Administration (EIA) is due later on Wednesday.
Meanwhile, deeper production cuts coming from the Organization of the Petroleum Exporting Countries and allies such as Russia – a group known as OPEC+ – continued to support market sentiment and prevented a bigger slide in prices on Wednesday.
The OPEC+, which has cut production by 1.2 million barrels per day (bpd) since Jan. 1 this year, will make a further oil supply cut of 500,000 bpd from Jan. 1, 2020 to support the market.
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