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.



Gulf Markets Rebound with Federal Reserve Allaying Investor Fears

The Tadawul All Share Index (TASI) rose 2.1 percent. (Reuters)
The Tadawul All Share Index (TASI) rose 2.1 percent. (Reuters)
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Gulf Markets Rebound with Federal Reserve Allaying Investor Fears

The Tadawul All Share Index (TASI) rose 2.1 percent. (Reuters)
The Tadawul All Share Index (TASI) rose 2.1 percent. (Reuters)

Most Gulf stock markets advanced on Tuesday after Federal Reserve officials made comments easing investor jitters, following a global sell-off on fears of a possible recession in the United States.

San Francisco Federal Reserve Bank President Mary Daly said on Monday that it was too early to determine whether the July jobs report indicated a real slowdown or weakness, but emphasized that it was “critically important” for the central bank to prevent the labor market from sliding into recession.

Market expectations remain intact that the Fed will cut interest rate by 50 basis points at its September meeting, as futures indicate a 71 percent chance of this major adjustment.

The market anticipates approximately 100 basis points of easing this year, with a similar expectation for 2025.

Monetary policy in the six-member Gulf Cooperation Council is usually guided by Federal Reserve decisions, with most regional currencies linked to the dollar. The standard Saudi stock market index (TASI) rose by 2.1 percent, with the shares of the aluminum products manufacturing company Al-Tayseer Group rising by 7.1 percent.

Saudi Aramco rose by 2.4 percent, after it announced a net profit in the second quarter amounting to SAR109.01 billion ($29.04 billion), exceeding the company’s average estimate of $27.7 billion.

Dubai’s main market index jumped 2.4 percent, recovering some of its losses from Monday when it fell more than 4 percent. The shares of the leading real estate development company, Emaar Properties, advanced 4.9 percent. In Abu Dhabi, the index rose by 1.4 percent.

The Qatari benchmark index fell by 0.5 percent, with the largest bank in the Gulf, Qatar National Bank, losing 1.4 percent.