NEW YORK (Reuters) - Oil prices fell on Wednesday after a steep U.S. crude inventory build added to worries about a possible delay in resolving the U.S.-China trade war, which has hurt global oil demand.
Late in the session, U.S. crude futures found some support after TC Energy Corp said it was shutting its Keystone crude pipeline due to a spill in North Dakota. The company did not say how long the major conduit, which carries 590,000 barrels per day (bpd) of crude from Canada to refineries in the U.S. Midwest, would be out of service.
U.S. West Texas Intermediate (WTI) crude futures settled at $55.06 a barrel, down 48 cents, or 0.9%. Brent crude futures fell 98 cents, or 1.6% to end at $60.61.
U.S. crude oil stockpiles soared last week amid higher imports and a release from national reserves, while gasoline and distillate inventories extended their declines even as refiners ramped up production, the Energy Information Administration said. [EIA/S]
Crude inventories, excluding the Strategic Petroleum Reserve (SPR), rose 5.7 million barrels, the EIA said, compared with analysts’ expectations for a 494,000-barrel build and a 708,000-barrel decline reported by industry group the American Petroleum Institute late Tuesday.
“A strong rebound in Canadian imports and another SPR release has encouraged a build to crude inventories,” said
Matt Smith, director of commodity research at Clipper Data. “Tempering the bearish influence of the solid crude build are draws to both distillates and gasoline amid a tick higher in implied demand.”
Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose for a fourth straight week, gaining 1.6 million barrels last week, EIA data showed, dragging on futures prices for the benchmark.
“Stocks at the WTI delivery hub have been trending higher since late September, which has put pressure on the prompt WTI time spreads, with the December/January spread this month having shifted from backwardation to contango,” Dutch bank ING said in a note.
The United States and China were continuing to work on an interim trade agreement, but it may not be completed in time for U.S. and Chinese leaders to sign it next month, a U.S. administration official said.
“Selling came courtesy of the fading optimism over trade and a Fed rate cut. Risk assets were dealt a blow as market players worried that the U.S. and China would delay settling their trade differences,” said PVM analyst Stephen Brennock.
The Federal Reserve on Wednesday cut interest rates for the third time this year to help sustain U.S. growth despite a slowdown in other parts of the world, but signaled no further reductions ahead unless the economy takes a turn for the worse.
A rate cut would help to support oil prices because a stronger economy typically implies higher demand for crude, while falling inventories suggest the market is coming into balance.
Editing by Marguerita Choy and David Goodman