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
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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 to Buy Stake in JV Petro Rabigh from Sumitomo Chem

The deal shrinks Sumitomo Chemical's stake in the joint venture to 15% while increasing Aramco's share to 60%. AFP
The deal shrinks Sumitomo Chemical's stake in the joint venture to 15% while increasing Aramco's share to 60%. AFP
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Aramco to Buy Stake in JV Petro Rabigh from Sumitomo Chem

The deal shrinks Sumitomo Chemical's stake in the joint venture to 15% while increasing Aramco's share to 60%. AFP
The deal shrinks Sumitomo Chemical's stake in the joint venture to 15% while increasing Aramco's share to 60%. AFP

Saudi Aramco will buy from Japan's Sumitomo Chemical a 22.5% stake in their petrochemical joint venture Petro Rabigh for $702 million, the companies said on Wednesday.

Under the deal, Aramco and Sumitomo Chemical will each provide $702 million in funding to Petro Rabigh and waive loans worth a total $1.5 billion, the statement said.

The deal shrinks Sumitomo Chemical's stake in the joint venture to 15% while increasing Aramco's share to 60%.

The sale aligns with Aramco's downstream expansion and Sumitomo Chemical's move away from commodity chemicals toward specialty chemicals, they added.

“Aramco continues to identify opportunities to strengthen its downstream value chain, secure placement of its upstream crude oil with affiliated refineries, and convert more of its hydrocarbons into high-value materials,” Aramco Senior Vice President of Fuels Hussain A. Al Qahtani said.

“By increasing our shareholding, we expect to achieve even closer integration with Petro Rabigh and facilitate its turnaround strategy,” he added.

According to Seiji Takeuchi, Sumitomo Chemical Senior Managing Executive Officer, the transaction “will significantly enhance Petro Rabigh’s financial position.”

Sumitomo Chemical plans to book a pre-tax loss of 27 billion yen ($183 million) in the July-September quarter as a result of the deal, the company said in a separate statement, adding that it is sticking to its annual profit forecast it announced in April.