U.S. WTI futures were down 0.70 percent to $61.35 per barrel as of 1:24 p.m. HK/SIN on Tuesday after surprising data showed that U.S. stockpiles rose and Chinese industrial output grew less than expected last month. Brent crude futures were down 0.38 percent to $70.97 per barrel. A report out by the American Petroleum Institute on Tuesday showed that U.S. crude inventories increased by 8.6 million barrels last week, to 477.8 billion. The data negated with analysts’ expectations of a decline in inventories by 800,000 barrels. Official numbers will be released by the U.S. Energy Information Administration later today.
Keeping prices from falling more steeply was continuing tension in the Middle East which threatens to disrupt supply. On Tuesday, Saudi Arabia said that armed drones hit two if its oil pumping stations. Earlier this week two oil tankers were compromised near the coast of the United Arab Emirates. There is also continuing tension in Iraq and Iran after U.S. President Donald Trump announced his intention to cut Iran’s oil exports to zero and to increase military presence in the region to combat Iranian security threats.
OPEC also announced this week that it intends to keep prices high and that it would not raise production levels if such a move would cause prices to decline.
Stock Market Movements
Asian markets were broadly higher on Wednesday after sinking earlier this week on renewed optimism about the U.S.-Sino trade talks and positive expectations for data that will be released later this week. Japan’s Nikkei 225 saw its first day of gains this week, trading up 0.39 percent in the early afternoon. The Shanghai Composite gained 1.27 percent and the Shenzhen Composite was up 1.59 percent. South Korea’s Kospi, the only major Asian index to trade higher this week, maintained its upward trend, heading 0.59 percent higher. Hong Kong’s Hang Seng Index also bounced back, trading up 0.81 percent.
According to reports by CNBC, an unnamed former U.S. ambassador to China puts the odds of a trade deal next month at 50-50.