Oil Edges Lower on Surprise Build in US Crude, Gasoline Stocks

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant
TT

Oil Edges Lower on Surprise Build in US Crude, Gasoline Stocks

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant

Oil prices slipped in early Asian trading on Wednesday following a brief rebound in the previous session after industry data showed an unexpected build in US crude oil and gasoline inventories, offsetting global oil supply concerns.

Brent crude futures fell 21 cents, or 0.27%, to $76.27 a barrel by 0020 GMT. US West Texas Intermediate crude slipped 25 cents, or 0.34%, to $72.95 per barrel.

US crude oil, gasoline and distillate inventories rose last week, according to market sources citing American Petroleum Institute figures on Tuesday, Reuters reported.

Benchmarks slipped accordingly. Both WTI and Brent had bounced off multi-month lows to settle higher in the previous session.

The API figures showed crude stocks were up by 176,000 barrels in the week ended Aug. 2, the sources said, speaking on condition of anonymity. Analysts polled by Reuters had expected crude stocks to fall by 700,000 barrels.

Gasoline inventories rose by 3.313 million barrels against analysts' expectations for a 1 million bbl draw, while distillate stocks rose by 1.217 million barrels, a bigger build than anticipated.

The US Energy Information Administration is due to release weekly inventory data at 10:30 a.m. (1430 GMT) on Wednesday.

On Monday, Brent futures slumped to their lowest since early January and WTI futures had touched their lowest since February, as a global stock market rout deepened on growing concerns of a potential recession in the US, the world's largest petroleum consumer.

However, both benchmarks broke a three-session declining streak on Tuesday as tensions in the Middle East stoked supply concerns, supporting prices.

Iran's vow of retaliation against Israel and the US following the killing of two militant leaders has raised concerns that a wider war is brewing in the Middle East.

"Any escalation of the conflict in the Middle East could see a greater risk of disruptions to supplies from the region," ANZ analyst Daniel Hynes said.

Lower production at Libya's 300,000 barrel-per-day (bpd) Sharara oilfield is also adding to concerns of supply shortages.

Global oil inventories decreased by around 400,000 bpd in the first half this year, according to US Energy Information Administration (EIA) estimates published on Tuesday. It expects stockpiles to decline by around 800,000 bpd in the second half of the year.



Aramco CEO Expects Demand Growth of 1.6-2 mln bpd in Second Half

A view shows el Feel oil field near Murzuq, Libya, July 6, 2017. (Reuters)
A view shows el Feel oil field near Murzuq, Libya, July 6, 2017. (Reuters)
TT

Aramco CEO Expects Demand Growth of 1.6-2 mln bpd in Second Half

A view shows el Feel oil field near Murzuq, Libya, July 6, 2017. (Reuters)
A view shows el Feel oil field near Murzuq, Libya, July 6, 2017. (Reuters)

Saudi Aramco Chief Executive Amin Nasser said on Tuesday he expected oil demand growth of between 1.6 and 2 million barrels per day (bpd) in the second half of this year, adding that fundamentals do not support the current drop in oil prices.

Nasser, who heads the world's most profitable oil company, said he expects global oil demand of 104.7 million bpd in 2024 and that some forecasts saw demand of more than 106 million bpd in the second half of the year.

Brent crude was trading at about $76.6 on Tuesday, its lowest since January. Traders said selling had been driven by expectations slower economic growth would reduce demand even as supply concerns mount because of tension in the Middle East.

"The market in my view is overreacting and the fundamentals do not support the drop in prices that we are witnessing today," Reuters quoted Nasser saying on an earnings call.

"The US is pointed (to) as a concern driving the current reaction that we are seeing in the market. Yet, the amount of finished gasoline supplies in the US, a proxy of demand, jumped to 9.4 million barrels a day in May, the highest since 2019."

He also said he expected demand in China to increase in the second half of the year to 17.5 million bpd.

"I would also add there seems to be continued upward revision of demand by various forecasters and agencies, which makes it difficult to make informed investment decisions as the revisions keep surprising to the upside," Nasser said.

Nasser also said he expected governments would replenish strategic crude inventories and that would further contribute to "healthy oil demand for the next few months". He did not specify which ones.