Rising US Inventories Pull Oil Prices Lower

Oil prices fell on Wednesday after industry data showed US stockpiles of crude unexpectedly rose, and as economic growth slowed, especially in Asia, amid the escalating trade dispute between the United States and China.

Brent futures dropped 28 cents, or 0.4%, to $73.93 a barrel on the day, adding to a 1.8% loss in the previous session, CNBC reported.

US crude futures were down 41 cents, or 0.6%, at $68.35 a barrel, having dropped nearly 2% on Tuesday.

Brent fell more than 6% in July, while US crude futures slumped about 7%, the biggest monthly declines for both benchmarks since July 2016.

Weighing on prices was a report by the American Petroleum Institute that showed domestic crude inventories rose by 5.6 million barrels last week. A Reuters poll had forecast a fall of 2.8 million barrels.

Official data from the US Energy Information Administration are due later on Wednesday.

“The API data this morning knocked the market lower. But it had already been under pressure after Brent failed to hold the pushback up into the old one-year uptrend it broke out of in past months,” said Greg McKenna, chief market strategist at AxiTrader.

Brent may drop to as low as $71 a barrel before being supported, while US crude “has a $2-4 fall as a strong possibility over the next week or so,” he said.

Signs that a supply disruption in the Bab al-Mandeb Strait in the Red Sea could be resolved also weighed on prices. Saudi Arabia suspended oil shipments through the strait last week.

Prices are also falling in the physical market, where top oil exporter Saudi Arabia is expected to cut prices for all crude grades going to Asia in August, according to several market participants on Wednesday.

Markets are also being pulled lower by concerns over slowing economic growth because of the trade dispute that is still ramping up between the United States and China.

Last month, China and the United States slapped tariffs on $34 billion of each other’s goods, and another round of US tariffs on $16 billion in Chinese goods is expected in August.