Investing.com – When production cuts and trade talks are out of sight, U.S. crude inventories will matter. And the forecasts for that aren’t looking too great.
Prices of U.S. West Texas Intermediate and London’s Brent oil were down more than 1% each on Wednesday, extending the previous session’s slide. Forecasts show a decline of less than 500,000 barrels last week in U.S. versus the 2.7-million drop in the week to Jan. 11. The U.S. Energy Information Agency will report official inventory numbers on Thursday.
was down 68 cents, or 1.3%, at $52.33 per barrel, after a 2.3% loss on Tuesday.
, the global oil benchmark, slipped by 73 cents, or 1.2%, to $62.34, after losing 2% in the previous session.
“The market continues to be caught between what appears to be a product glut with emphasis on gasoline and too much crude production,” said Scott Shelton, energy futures broker and commentator with ICAP (LON:) in Durham, N.C.
The EIA said last week that rose by 7.5 million barrels, compared to expectations for a build of 2.77 million barrels, while increased by 2.97 million barrels, compared to forecasts for a gain of 1.57 million.
Even news of possible U.S. sanctions against Venezuela — a development that ought to push oil prices higher — didn’t help the market rebound on Wednesday.
The Trump administration could impose new restrictions on Caracas’ vital oil sector as soon as this week to punish President Nicolas Maduro’s government amid street protests unfolding in the Latin American country, Reuters reported.
A slide in Wall Street shares also weighed on oil.
“Risk appetite has turned a bit sour,” Fawad Razaqzada, analyst at forex.com, said.
“Concerns over economic growth is back after those disappointing Chinese figures over the weekend,” Razaqzada added. China posted its lowest annual economic growth in nearly 30 years this week, as well as factory orders indicating a further loss in activity and jobs.
On the U.S.-Sino trade talks, the Financial Times reported that Washington rejected an offer by two Chinese vice-ministers to travel to the U.S. this week for preparatory trade talks because of a lack of progress on two key issues, but White House economic adviser Larry Kudlow denied that report.
President Donald Trump’s no-show at the World Economic Forum in Davos, Switzerland, due to the partial U.S. government shutdown, also snuffed out hopes that the trade talks would make some advanced progress this week. Trump and high-ranking U.S. officials had been expected to meet the Chinese delegation to the forum ahead of the 90-day trade truce ending March 1.
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