Mubasher: Oil prices fell on Wednesday after industry data indicated a surprise rise in the US crude inventories, coupled with a slowing economic growth, particularly in Asia on the back of heightened trade tensions between Washington and Beijing.
International Brent crude futures slid 0.4% to $73.93 per barrel (pb) early in the day from their last close, reaching a total loss of 1.8% on Tuesday, as US Nymex futures dropped 0.6% to $68.35 pb from their last settlement, after falling nearly 2% in the previous session.
For July, both contracts hit the largest monthly drops since July 2016, with Brent plummeting over 6% and Nymex sliding almost 7%.
The American Petroleum Institute (API) reported that US oil inventories climbed by 5.6 million barrels last week, beating forecasts of a decline of 2.8 million barrels, according to Reuters.
Although the API data weighed on the market, “it had already been under pressure after Brent failed to hold the push back up into the old one-year uptrend it broke out of in past months,” AxiTrader chief market strategist Greg McKenna told the news agency.
The decline in prices came ahead of official data from the US Energy Information Administration (EIA) due later in the day.
The global benchmark could fall to a low of $71 pb, before being supported, while US crude “has a $2-$4 fall as a strong possibility over the next week or so,” McKenna predicted.
Adding to the falling prices were signs that supply disruption in the key Red Sea lane, Bab al-Mandeb Strait could be resolved, after Yemeni Houthi movement stated that it was ready to cease attacks in the Red Sea to support peace efforts.
Moreover, mounting concerns over economic slowdown also pulled down markets, on the heightened trade conflict between the US and China, while a further escalation is looming, as US President Donald Trump is set to propose further 25% tariffs on a further $200 billion worth of Chinese imports, instead of the previous proposed 10% duties.
Manufacturing in Asia slowed down, adding to the worries about the region’s economic outlook.
This slowdown started to be reflected in the container market, where the majority of finished products are imported and exported. The Harpex index gauging the market dropped by 10% in June from its 2011 highs to 613 in last settlement.
By 8:01 am GMT, Brent crude futures fell 0.51% to $73.83 pb, while US Nymex futures dropped 0.74% to $68.25 pb.
