Oil steadies despite continuing U.S. stockpile growth

By Saket Sundria and Grant Smith on 10/22/2019

SINGAPORE (Bloomberg) - Oil held steady as estimates of brimming U.S. crude stockpiles added to signs that, with demand constrained by weak economic growth, markets remain comfortably supplied.

West Texas Intermediate futures were little changed above $53/bbl after falling for the past two days. U.S. crude inventories probably rose for a sixth time last week, the longest run of gains in almost a year, according to a Bloomberg survey before government data due Wednesday.

Oil prices have slid from a peak reached in April as the trade dispute between Beijing and Washington weakens an already-fragile economic outlook, and with it the prospects for fuel demand. While President Donald Trump said negotiations are advancing, the impasse continues to weigh on sentiment.

 “The market looks pretty weak,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “It’s being dragged down by downbeat economic expectations and demand forecasts, and strong production in the U.S. and elsewhere.”

WTI for November delivery, which expires Tuesday, rose $0.18 to $53.49 a barrel on the New York Mercantile Exchange as of 10:02 a.m. London time -- its most recent trade. The more active December contract gained 19 cents to $53.70 at 10:37 a.m.

Brent for December settlement increased $0.29 to $59.25 a barrel on the London-based ICE Futures Europe Exchange, after closing down 0.8% on Monday. The global benchmark crude traded at a premium of $5.55 to WTI for the same month.

U.S. crude stockpiles probably increased by 3 MMbbl last week, according to the median estimate of 11 analysts surveyed by Bloomberg. If confirmed by the Energy Information Administration, it would be the longest run of gains since November. The industry’s own data is due later Tuesday.

“Given the fact we are in the storage buildup phase right now, it’s difficult to see a sudden turnaround” for prices, Weinberg said.

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