Oil dropped after a government report showed US crude inventories rose the most in two months, overshadowing the lingering relief from the trade truce between the world’s two largest economies.
West Texas Intermediate dipped 0.8% to settle near $63 a barrel, snapping a four-session winning streak. Global benchmark Brent closed around $66. US crude stockpiles rose 3.45 million barrels, the biggest gain since March, the Energy Information Administration said Wednesday.
“Crude futures are in a corrective phase,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. Crude’s 50-day moving average of about $63.90 has so far provided a ceiling for gains, he said.
The bearish government data stalled a rally spurred by the US-China trade détente and President Donald Trump’s hostile rhetoric on Iranian supply. Trump reiterated Wednesday that Tehran can’t have a nuclear weapon — while Iran’s foreign minister urged the US to take a “more realistic” approach to talks.
The friction comes a day after Trump said during a visit to Saudi Arabia that he’ll drive Iran’s oil exports to zero if a nuclear agreement can’t be reached. Washington also announced new sanctions on a shipping network it said was moving billions of dollars’ worth of the Persian Gulf state’s oil.
Oil futures have rallied from the lowest closing price in four years at the beginning of last week. They’re still down more than 10% this year, underperforming major equity markets.
Trump is visiting the Middle East this week, hoping to strike deals with countries including Saudi Arabia. The kingdom — the de-facto leader of the Organization of the Petroleum Exporting Countries and its allies — has pushed the cartel to increase output to punish noncompliant members. A further boost expected at a June 1 meeting would add to concerns about a surplus.
The group’s monthly report showed a careful start to those increases in April. OPEC and its allies added just 25,000 barrels a day last month, a fraction of the scheduled 138,000 barrels a day.
Oil Prices
WTI for June delivery declined 0.8% to settle at $63.15 a barrel in New York.
Brent for July settlement slipped 0.8% to settle at $66.09 a barrel.
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