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Oil futures slipped early after a U.S. inventory report late-Tuesday showed a bigger-than-expected weekly climb and as investors watched for an update in policy from the Federal Reserve, which could provide guidance on the health of the domestic economy, factor in the outlook for crude consumption and production.
The American Petroleum Institute reported that U.S. crude supplies rose by 1.4 million barrels for the week ended Dec. 6, according to sources. The API data also showed stockpile increases of 4.9 million barrels for gasoline and 3.2 million barrels for distillates.
West Texas Intermediate crude for January delivery CLF20, -0.37% declined 32 cents, or 0.5%,at $58.92 a barrel on the New York Mercantile Exchange, more than wiping out its gain from Tuesday, which placed it at its highest front-month contract settlement since Sept. 17, according to Dow Jones market Data.
February Brent crude BRNG20, -0.53% lost 47 cents, or 0.7%, to trade at $63.87 a barrel on ICE Futures Europe, following its virtually flat finish a day ago.
The API report comes ahead of a the weekly reading from U.S. Energy Information Administration which is expected to show crude inventories down by 2.8 million barrels last week, according to analysts polled by S&P Global Platts. The monthly report from the Organization of the Petroleum Exporting Countries is also due later in the morning.
Since the conclusion of a meeting of OPEC and its allies last week in Vienna, where the cartel reached an agreement to cut an additional 500,000 barrels a day, prices of crude have bounced around, with attention shifting to global demand and the degree by which the China-U.S. trade conflict could hurt global economies and hence appetite for the commodity.
White House advisers Larry Kudlow and Peter Navarro have both indicated that tariffs scheduled to hit Chinese goods on Dec. 15 are “still on the table,” following a report from the Wall Street Journal that said both parties were bracing for a delay of a tariff increases on China goods on Sunday, which would be read as an escalation of tensions.
Meanwhile, an update from the Fed, due at 2 p.m. Eastern Time, about a half-hour before crude prices settle, could provide some guidance to traders on tariff wars and global economic health.
“The oil price is continuing its dance close to the key level of $59, while investors are waiting for new market movers. These could arrive from the Federal Reserve or news on the trade war talks,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades.
Wednesday’s oil action also comes as Saudi Arabia’s oil company Aramco surged in its debut on the Saudi Tadawul stock exchange, reaching a 10% daily limit in early action, making the $25.6 billion initial public offering the biggest in history and creating the biggest company in the world at $1.88 trillion valuation.
