- Crude inventories rose by 2.8 million barrels in the last week, the U.S. Energy Information Administration reported.
- Venezuela’s main oil export port of Jose and its four crude upgraders are unable to resume operations following a massive power blackout.
- Worries about demand limit oil’s rally as manufacturing data from Asia, Europe and the U.S. point to an economic slowdown.
Oil prices gave up ground on Wednesday morning after U.S. government data showed the nation’s crude oil stockpiles increased last week, though its fuel inventories fell.
Crude inventories rose by 2.8 million barrels in the last week, the U.S. Energy Information Administration reported, compared with analysts’ expectations for a decrease of 1.2 million barrels.
Meanwhile, gasoline stocks fell by 2.9 million barrels, a slightly greater draw than analysts expected in a Reuters poll that called for a 2.8 million-barrel drop. Distillate stockpiles, which include diesel and heating oil, fell by 2.1 million barrels, versus expectations for a 896,000-barrel drop, the EIA data showed.
International benchmark Brent crude was up 2 cents at $67.99 around 10:50 a.m. ET (1450 GMT), giving up earlier gains and slipping away from its year-to-date high of $68.69 reached last week.
U.S. West Texas Intermediate crude futures were down 25 cents at $59.69. The U.S. benchmark rose 1.9 percent in the previous session.
Crude futures gyrated earlier in the session as disruptions to Venezuela’s crude exports provided support but were offset by an earlier report of rising U.S. fuel stockpiles last week. Gains were also kept in check amid growing fears over the impact of a global economic slowdown on demand.
“We seem to have reached a state of equilibrium after the recent headline-driven choppy trading and we need to see some new impetus for price direction,” said Jeff Halley, senior market analyst at OANDA in Singapore.
That is unlikely until a conclusion is reached on U.S.-China trade talks, he added, referring to negotiations due to restart on Thursday as the world’s two largest economies seek to end an eight-month old trade war.
Worries about demand have limited oil’s rally as manufacturing data from Asia, Europe and the United States pointed to an economic slowdown.
Venezuela’s main oil export port of Jose and its four crude upgraders were unable to resume operations following a massive power blackout on Monday, the second in a month.
Crude exports from the key OPEC member have dropped sharply since Washington in January banned U.S. refiners from buying Venezuelan oil.
Oil prices have risen more than 25 percent this year, supported by supply curbs by OPEC and other major producers, along with U.S. sanctions on exports from Venezuela and Iran.
“Yo-yo price swings have become the norm in the oil market,” PVM analyst Stephen Brennock said in a note. “Market focus switched back to supportive supply considerations. They include, most notably, Venezuela’s deepening oil woes.”
Brent crude traded in a relatively narrow range of $64 to $69 a barrel throughout March, reflecting the tension between tightening supplies and concerns over global demand.
At the same time, disruptions in the United States have also lent support.
The U.S. Coast Guard on Monday reopened portions of the Houston Ship Channel with restrictions on waterways affected by a petrochemical leak and fire outside Houston that have disrupted ship traffic.
The disruptions to transport and refining operations will weigh heavily on U.S. inventories, Stephen Schork, editor of Pennsylvania-based The Schork Report, said in a note.
Also, crude flows from two key shale basins to the Cushing, Oklahoma delivery point for U.S. crude futures slowed in March due to winter production outages, dealers said.
Hedge funds and other money managers have increased bets that demand for oil will be sustained, even as the market rallied last week.
— CNBC’s Tom DiChristopher contributed to this report.
The United States Oil Fund LP (USO) was trading at $12.42 per share on Wednesday morning, down $0.05 (-0.40%). Year-to-date, USO has gained 3.41%, versus a 5.34% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of CNBC.