Oil settles lower as U.S. inventories disappoint market
Crude prices declined slightly on Wednesday as U.S. government data showed inventories drew down less than an industry report had suggested on Tuesday.
Brent crude rallied to its highest level this year early in the session, bolstered by an unexpected drop in U.S. crude inventories reported by trade group the American Petroleum Institute late on Tuesday. However, official data from the Energy Information Administration on Wednesday showed a 1.4 million-barrel crude drawdown, about half the API`s reported decline.
"The rally overnight was predicated on a 3 million-barrel-per-day draw in crude that did not materialise," said Bob Yawger, director of energy futures at Mizuho in New York. "You`re going to need another catalyst."
Brent crude futures settled down 10 cents at $71.62 a barrel. During the session, the contract touched $72.27 a barrel, the highest this year.
U.S. West Texas Intermediate (WTI) crude futures settled down 29 cents per barrel at $63.76 a barrel. The contract touched an intraday high of $64.61 a barrel, just shy of a 2019 high of $64.79 hit last week.
Crude continued to be supported by steady economic growth in China.
China`s economy grew by 6.4 percent in the first quarter, official data showed, defying expectations for a further slowdown and assuaging global markets as a U.S.-China trade deal also appears near.
Refinery throughput in China - the world`s second-largest crude user - rose 3.2 percent in March from a year earlier.
"The demand side of the equation got a substantial fillip via today`s China data suggesting prices will continue to move higher on improving global growth and risk sentiment," said Stephen Innes, head of trading at SPI Asset Management.
Prices have been supported this year by a pact reached by the Organisation of the Petroleum Exporting Countries and allies, including Russia, to limit their oil output by 1.2 million barrels per day. Global supply has been tightened further by U.S. sanctions on OPEC members Venezuela and Iran.
Iran`s crude exports have dropped in April to their lowest daily level this year, tanker data showed and industry sources said, suggesting a drawdown in buyer interest ahead of expected further pressure from Washington.
"Buyers are shying away in view of U.S. policy uncertainty regarding waivers to import Iranian crude oil," BNP Paribas strategist Harry Tchilinguirian told the Reuters Global Oil Forum.
In June, OPEC and its partners will decide whether to extend their agreement, but Russia`s willingness to stick with the cuts now looks less clear.
Gazprom Neft, the oil arm of Russian gas company Gazprom, expects the global oil deal to end in the first half of the year, a company official said.
"Hints from Moscow to abandon self-imposed supply restrictions have cast a cloud of uncertainty over the OPEC production strategy in the second half of 2019," said Stephen Brennock of oil broker PVM.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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