Oil falls but losses limited by new Brexit deal

Industry data shows larger-than-expected build-up in US inventories


Reuters October 17, 2019
Industry data shows larger-than-expected build-up in US inventories. PHOTO: REUTERS

LONDON: Oil prices fell on Thursday as industry data showed a larger-than-expected build-up in US inventories but losses were limited after the United Kingdom and the European Union announced they had reached a deal on Brexit.

Global benchmark Brent crude oil was down by $0.15 at $59.27 a barrel by 1045 GMT. US West Texas Intermediate (WTI) crude oil was down $0.23 at $53.13.

US crude inventories soared by 10.5 million barrels to 432.5 million barrels in the week to October 11, the American Petroleum Institute's weekly report showed ahead of official government stocks data due on Thursday.

Analysts had estimated US crude inventories rose by around 2.8 million barrels last week.

The US Department of Energy was scheduled to publish the official inventory data on Thursday.

"US sanctions imposed on the Chinese shipping company Cosco are seriously denting demand for imported crude oil... This has a profound impact on US crude oil inventories as reflected in last night's API report," said Tamas Varga, an analyst at PVM Oil Associates.

"US refinery maintenance is not helping to reverse the current trend and further builds in US crude oil inventories can be expected in the next few weeks."

The United States imposed sanctions on Cosco Shipping Tanker (Dalian) Co and subsidiary Cosco Shipping Tanker (Dalian) Seaman and Ship Management Co for allegedly carrying Iranian crude oil.

Adding to concerns about the global economy - and therefore oil demand - data from the United States showed retail sales in September fell for the first time in seven months. Earlier data showed a moderation in job growth and services sector activity.

Still, the new Brexit deal helped limit the fall in oil prices. Prime Minister Boris Johnson said that Britain and the EU had agreed a "great" new Brexit deal and urged lawmakers to approve it at the weekend.

European Commission President Jean-Claude Juncker also said Britain and the EU had agreed a deal.

However, the Northern Irish party Johnson needs to help ratify any agreement has refused to support the deal.

Hopes of a potential US-China trade deal also supported crude prices. China's commerce ministry said on Thursday that China hoped to reach a phased agreement with Washington as early as possible, and make progress on cancelling tariffs on each others' goods.

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