Oil slipped on Wednesday after an industry report showed a surprise build-up in U.S. crude inventories, but optimism surrounding the signing of the first phase of a U.S.-China trade deal prevented a bigger slide in prices.
West Texas Intermediate (WTI) crude futures fell 12 cents, or 0.21%, to $58.29 per barrel.
Brent crude futures dropped 9 cents, or 0.14%, to $64.18 a barrel.
Wednesday’s decline reversed two days of gains, with WTI climbing 1.1% through Tuesday and Brent gaining 1.4% during the period, on the expectation that China and the United States, the world’s two biggest crude oil users, would soon sign a preliminary agreement beginning an end to their 16-month trade war.
But data from industry group the American Petroleum Institute late on Tuesday showed U.S. crude stocks rose by 3.6 million barrels in the week to Nov. 22 to 449.6 million, compared with analysts’ expectations for a decrease of 418,000 barrels.
“Strong builds in U.S. inventories have kept bullish gains measured as markets remain cautious over shaky economic fundamentals and demand-side concerns,” said Benjamin Lu, analyst at Singapore-based brokerage Phillip Futures.
Later on Wednesday the U.S. Energy Information Administration (EIA) is due to publish official inventory data.
“If the (EIA) numbers are similar to the API, this would be the fifth straight week of stock builds, and would not be the most constructive reading for WTI as we head into the Thanksgiving holiday,” ING analyst Warren Patterson said in a note.
Still, optimism on global trade, along with market expectations for an extension in supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) and associates, have supported oil prices, Phillip Futures analyst Lu said.
U.S. President Donald Trump said on Tuesday that the United States and China are close to agreement on the first phase of their trade deal, after top negotiators from the two countries spoke by telephone and agreed to keep working on remaining issues.
“Still, caution remains as traders are awaiting some clarity on the deal signing venue and date along with the exact measure of tariff rollbacks,” said Stephen Innes, market strategist at AxiTrader.
Elsewhere OPEC and its production-cutting allies, a grouping known as ‘OPEC+’, will begin holding meetings on Dec. 4 in Vienna to examine output policy.
A meeting of the OPEC+ group on Dec. 6 will make a final announcement on the future policy, with an extension of curbs, possibly until June, the expected outcome.