U.S. West Texas Intermediate and international-benchmark crude oil futures are trading lower early Wednesday after failing to follow-through to the upside following yesterday’s strong surge. The catalyst behind the weakness is a larger-than-expected build in U.S. crude stocks which somewhat offset the positive sentiment being generated by optimism over the progress being made in the U.S.-China trade talks.
American Petroleum Institute Weekly Inventories Report
The API reported late Tuesday a crude oil inventory build of 4.26-million barrels for the week-ending October 31, compared to analyst expectations of a 1.515-million barrel build.
The net draw for the year has now shrunk to 8.26 million barrels for the 45-week reporting period so far, using API data.
The API also reported a draw of 4.0 million barrels of gasoline for the week-ending October 31. Analysts were looking for a draw in gasoline inventories of 1.809 million barrels for the week.
Distillate fuel inventories also fell by 1.6 million for the week.
OPEC Official Sees Upside Potential Next Year
OPEC Secretary-General Mohammad Barkindo said on Tuesday that the oil market outlook for 2020 may have upside potential, appearing to downplay any need for deeper cuts to production.
“Based on the preliminary numbers, 2020 looks like it will have upside potential,” Barkindo told a briefing.
Asked whether he was more optimistic about the market than he had been in October, when he had said all options were open including a deeper cut, Barkindo replied that the picture had improved.
“There are definitely brighter spots. The outlook as we get closer to 2020…The numbers are looking more refined and the picture is looking brighter,” he said.
On whether the market looked oversupplied for next year, Barkindo said: We are not there yet. It is not possible for us at the moment to pre-empt all processes” of reviewing the market before the December meeting.
Shortly after the regular session opening, the U.S. Energy Information Administration (EIA) will release its weekly inventories data at 15:30 GMT. The report is expected to show an 800,000-barrel build. However, given the API data, traders are expected to watch for an even larger increase.
After the EIA report, traders will once again take cues from U.S.-China trade talks.