Crude Build Puts Oil Prices Modestly Higher

Darnell Taylor
November 7, 2019

Brent for January settlement fell 37 cents, or 0.6%, to $62.59 a barrel on the London-based ICE Futures Europe Exchange.

A meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign an interim deal could be delayed until December as talks continue over terms and venue, a senior official of the Trump administration told Reuters on Wednesday.

Gasoline and distillate inventories dropped 2.8 million barrels and by 622,000 barrels respectively.

West Texas Intermediate crude futures rose 37 cents, or 0.7 per cent, from their last close to $56.72 a barrel.

Oil prices received some support earlier this week by expectations that China and the USA were on the cusp of concluding phase one of their trade deal that would roll back much of the tit-for-tat tariffs.

And even though stock builds tend to disappear just as quickly as they suddenly appear, traders were spooked by the disclosure from the Energy Information Administration that USA crude inventories rose by 7.9 million barrels in the week to November 1, compared with analysts' expectations for a 1.5 million barrel increase.

Oil retreated from a six-week high as signs of another increase in US crude reaffirmed the prevailing view that global markets are comfortably supplied.

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United States crude exports fell almost 1 million barrels last week to 2.4 million barrels per day.

Nationwide inventories are forecast to expand by 2 million barrels, according to a Bloomberg survey before Energy Information Administration data on Wednesday.

Tuesday evening, the American Petroleum Institute (API) reported that crude inventories increased by 4.26 barrels in the week ending October 31.

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.

The U.S. pulled out of the nuclear pact a year ago and has imposed tough new sanctions on Iran.

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

However, Russian energy minister Alexander Novak said the current oil price of more than $60/Bbl showed markets were stable.

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