Oil near 6-week low after report on growing American stockpiles

NEW YORK: Oil traded near a six-week low after a report indicated American crude stockpiles increased, while signs that trade tensions between the US and China haven’t gone away damped investor sentiment.

Futures in New York edged lower after rising 0.3% Tuesday to snap a five-day losing streak. The American Petroleum Institute reported inventories expanded by 1.1 million barrels last week, according to people familiar with the data.

Existing US tariffs on Chinese goods are likely to stay in place until after the presidential election, people familiar said, while Reuters reported the US is drafting more rules to block sales to Huawei Technologies Co.

The renewed trade frictions are a reminder that the phase-one deal to be signed by the US and China this week won’t necessarily spur a rebound in economic growth and crude demand.

That’s adding to a bearish outlook for oil after Washington and Tehran stepped back from the brink of war last week.

“While the stay in existing tariffs may be disappointing, further details from the agreement tonight might change the mood in the market,” said Howie Lee, an economist at Oversea-Chinese Banking Corp in Singapore.

“Additional positive details, especially pertaining to phase-two negotiations, might yet give crude prices a lift.”

West Texas Intermediate crude for February delivery fell 22 cents, or 0.4%, to US$58.01 a barrel on the New York Mercantile Exchange as of 10.14am in Singapore.

The contract closed at US$58.08 Monday, the lowest since Dec 3.

Brent futures for March settlement dropped 0.3% to US$64.27 a barrel on the ICE Futures Europe exchange after climbing 0.5% on Tuesday.

The global benchmark crude traded at a US$6.23 premium to WTI for the same month.