Oil prices decline on US crude build, weak euro zone data

Fall comes after oil market posted gains for three consecutive sessions

Reuters November 06, 2019
Fall comes after oil market posted gains for three consecutive sessions. PHOTO: REUTERS

LONDON: Oil prices declined on Wednesday, pulled down by a larger-than-expected build in US crude stocks and weak euro zone economic figures, after gaining for three sessions on expectations of an easing in US-China trade tensions.

Brent crude was down $0.17 at $62.79 a barrel by 1126 GMT. West Texas Intermediate crude moved $0.05 lower to $57.18 per barrel.

US crude inventories rose by 4.3 million barrels in the week ended November 1 to 440.5 million barrels, the American Petroleum Institute said on Tuesday. That was nearly triple the analysts' forecast for an increase of 1.5 million barrels.

Official data from the US government's Energy Information Administration was due later on Wednesday.

"Oil prices are slightly under pressure following API's larger-than-expected crude build on Tuesday. Market participants will closely monitor if the build is confirmed by the EIA later today (Wednesday), considering that last week API had a crude draw and the EIA a crude build," said Giovanni Staunovo, oil analyst for UBS.

The United States and China, the world's two biggest oil consumers, are working to narrow their differences enough to sign a "phase one" trade deal as early as this month to resolve a trade war that has slowed global growth.

Data on Wednesday showed Germany's services sector barely grew in October, while euro zone business activity expanded slightly faster than expected last month, but remained close to stagnation.

Adding to Middle East tensions, Iran started to inject uranium gas into centrifuges at an underground nuclear facility, further distancing itself from a 2015 nuclear deal between Tehran and world powers that curbed its atomic work.

Last year, US President Donald Trump exited the deal and renewed sanctions on Tehran, slashing Iran's economically vital crude oil sales by more than 80%.

"Alongside the continued rolling back of its nuclear commitments, the OPEC nation may be tempted to cause further supply disruptions in the Middle East in a bid to drive up prices," PVM analyst Stephen Brennock said.

"Accordingly, conditions are ripe for tensions in the region to escalate and for the geopolitical risk premium to strike back with a vengeance."

In Iraq, anti-government protesters blocked the entrance to the Nassiriya oil refinery on Wednesday, security and oil sources said.

The protesters blocked tankers from entering the refinery, causing fuel shortages across Dhi Qar province, the sources told Reuters.

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