Oil languishes near five-month low after US stockpile surprise

The increase in the US stockpile of crude oil and the unresolved trade issues with China has spiralled the price of crude oil to a low of US51 a barrel. ( Bloomberg pic)

SEOUL: Oil held its biggest daily loss this month to trade near US$51 a barrel as a surprise increase in American crude inventories and no sign of a breakthrough in the US-China trade war damped sentiment.

Futures in New York edged higher after dropping 4% in the previous session. US stockpiles rose by 2.2 million barrels last week, the Energy Information Administration reported Wednesday, compared with a 1 million barrel decrease forecast in a Bloomberg survey. President Donald Trump said he had no deadline for China to return to trade talks, other than the one in his head.

The rupture between the US and China and swelling American stockpiles have conspired to wipe out most of this year’s rally, with West Texas Intermediate crude now at similar levels to where it was in mid-January. While the Organisation of Petroleum Exporting Countries and its allies look set to extend their output cuts beyond June, there are questions over whether that will be enough to arrest the slide in prices. Still, WTI’s 14-day relative strength fell back into oversold territory Wednesday, a signal a rebound could be coming.

“The market is waiting for any signs of progress in trade talks,” said Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp. in Seoul. “It’s also trying to assess whether the increase in stockpiles will be offset by the summer driving season in the US”

WTI futures for July delivery rose 13 cents, or 0.3%, to US$51.27 a barrel on the New York Mercantile Exchange at 9:34 a.m. in Singapore after climbing as much as 0.5% earlier. The contract closed down US$2.13 on Wednesday, the biggest drop since May 31.

Brent for August settlement added 15 cents, or 0.3%, to US$60.12 a barrel on London’s ICE Futures Europe Exchange. It closed down 3.7% on Wednesday. The global benchmark crude traded at a premium of US$8.63 to WTI for the same month