Oil's Winning Streak Ends As Rising Crude Stockpiles Steal Trump's Thunder

Meanwhile, OPEC pumps less than promised: File Image/Pixabay

Despite advances this week in trade deals that would lessen the impact of Washington's tariffs and U.S. president Donald Trump forging high-profile partnerships in the Middle East, all it took for oil to fall on Wednesday was the most ephemeral news of all: a build-up in U.S. crude inventories.

Data from the Energy Information Administration showed that crude stockpiles rose by 3.5 million barrels to 441.8 million barrels last week, compared to expectations for a 1.1 million barrel draw.

This stirred familiar worries about demand, and Brent settled down 54 cents to $66.09 per barrel, while West Texas Intermediate settled 52 cents to $63.15.

Also on Wednesday, the Organization of the Petroleum Exporting Countries (OPEC) downsized its growth forecast for oil supply from the U.S. and other non-OPEC producers this year, and this prompted Bob Yawger, director of energy futures at Mizuho, to remark, "They are not changing their demand profile but adding more barrels….at some point, supply is just going to swamp out demand and drill the market lower."

Bloomberg was equally downbeat, pointing out that "Oil is still down by around 13 percent this year, and U.S. producers have said they expect little change in prices before year-end."

The news agency seemed to hold a dim view of Trump's efforts to strike a nuclear deal with Iran, stating that "Increased flows from Iran would add to a potential glut later this year."

In other oil news on Wednesday, figures in OPEC's Monthly Oil Market Report showed that despite what the cartel hyped to media, the eight OPEC producers added fewer than 30,000 barrels per day (bpd) to their collective supply in April, versus plans to add 138,000 bpd.

Saudi Arabia raised its production by 49,000 bpd compared to March and pumped 9 million bpd in April; however, this was offset by declines in Iran, Venezuela, and Nigeria: OPEC production dropped by 62,000 bpd in April compared to March.