(Bloomberg) -- Oil fell after a U.S. government reported showed a bigger-than-expected build in domestic crude supplies.
Futures fell as much as 1.6% in New York on Wednesday. The Energy Information Administration reported that American crude inventories rose by 5.7 million barrels last week, more than forecast by analysts in a Bloomberg survey. Supplies at the key Cushing, Oklahoma, storage hub rose for a fourth week while gasoline stockpiles tumbles to the lowest in two years.
“The build was a little bit surprising -- we will see if that trend continues,” said Brian Kessens, portfolio manager at Tortoise, a Kansas firm that oversees more than $21 billion in assets. “It was good to see that both gasoline and distillates had a draw so our takeaway is that the economy will continue to function with a fairly healthy clip.”
A deteriorating global economy weakened by the trade war has driven a 17% slump in crude since late April. That’s put the onus on OPEC and its allies to extend output cuts, though there are questions over Russia’s willingness. The Saudis may need to consider deeper curbs with other Gulf countries if Russia abstains, Citigroup Inc (NYSE:C). said.
WTI for December delivery slipped 55 cents to $54.99 a barrel on the New York Mercantile Exchange as of 11 a.m. The U.S. benchmark was trading in a bearish contango structure, which indicates oversupply.
Brent for December fell 35 cents to $61.24 a barrel on the London-based ICE (NYSE:ICE) Futures Europe Exchange. The global benchmark crude traded at a premium of $6.41 to WTI.
The OPEC+ alliance is due to meet in December to discuss whether to extend or deepen production cuts that expire in March. Brazil’s President Jair Bolsonaro said the country received an informal request to join OPEC, following a conversation with Saudi Crown Prince Mohammed Bin Salman, and that he would like to join.
