Oil prices fell more than 2% on Wednesday after official data showed a rise in U.S. crude inventories, adding to worries about an oversupplied market as weak economic readings in the United States depressed global financial markets.
Brent crude futures settled down $1.20, or 2%, at $57.69 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 98 cents, or 1.8%, to settle $52.64 a barrel.
Wall Street’s main indexes tumbled more than 2% as data suggested fallout from the U.S.-China trade war was hurting the U.S. labor market. World equity benchmarks hit their lowest levels in a month.
U.S. crude inventories rose 3.1 million barrels last week, the Energy Information Administration said, far exceeding analyst expectations for an increase of 1.6 million barrels.
Crude stocks at the Cushing, Oklahoma, delivery hub for WTI fell by 201,000 barrels, EIA said.
“I think you’re continuing to get signs that demand growth is the primary drag on the market, with the disappointing manufacturing number that came out yesterday,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
On Tuesday, front-month WTI prices settled down for a sixth straight session, their longest losing streak this year after data showed U.S. manufacturing activity dropped to a 10-year low.
“Even with 12 days and counting of bearish trading action on WTI futures, that market is now only starting to reach oversold territory. $50.50 remains a key support level,” said David Thompson, executive vice president at Powerhouse, an energy-specialized commodities broker in Washington.
Signs of easing geopolitical tensions in the Middle East also weighed on prices, traders said. Tensions flared after Saudi Arabia blamed Iran for an attack on Saudi oil facilities on Sept. 14., a charge Tehran denies.
Iran’s Oil Minister Bijan Zanganeh sought to defuse tensions with Saudi Arabia, calling his counterpart in Riyadh “a friend” and saying Tehran was committed to stability in the region. Both oil ministers, who have repeatedly clashed at OPEC meetings over output policies, were attending a top Russian energy conference chaired by President Vladimir Putin.
Iran’s oil minister said he expected a slight surplus in oil supply next year.
Putin said it was important to use all available tools to balance energy markets. He pledged Russia would remain a major player in OPEC+, the alliance between the Organization of the Petroleum Exporting Countries and other oil-producing nations, which has cut output by 1.2 million barrels per day.
The United Arab Emirates’ Minister of Energy and Industry Suhail al-Mazrouei said conformity levels were the same as previously announced at the last OPEC+ joint ministerial monitoring committee meeting.
Ecuador, one of the smallest OPEC members, said it would leave the 14-nation bloc from Jan. 1 due to fiscal problems. Ecuador will be the second country to withdraw from OPEC in the last year after Qatar.