Oil futures closed higher on Wednesday after data out of the U.S. showed that crude supplies increased for the fourth consecutive week. The Energy Information Administration reported that U.S. crude inventories increased by 1.4 million barrels, a substantial increase, but well below the highest estimates of as many as 6 million barrels predicted on Tuesday by the American Petroleum Institute, MarketWatch reported. Oil prices settled more than 3 percent higher on Wednesday after the EIA release.
Oil futures began to retreat on Thursday morning, however, with the selloff prompted by lingering concerns about the U.S.-Sino trade war and the questionable passage of “phase 1” of the trade deal. On Wednesday, the U.S. Congress passed a human rights law supporting Hong Kong, which analysts believe could put a strain on the already weak U.S.-Sino relations. Analysts are concerned that demand will remain low if a deal is not passed and that prices will head lower if supply continues to outweigh demand. As of 2:34 p.m. HK/SIN, U.S. WTI futures were down 0.32 percent to $56.83 per barrel, and Brent crude futures were down 0.30 percent to $62.21 per barrel.
Traders are now looking towards OPEC to see if they will extend their production cuts into 2020. On Wednesday, Russian President Vladimir Putin re-committed to supporting OPEC. Last year OPEC committed to reducing oil production by 1.2 million barrels per day. The next meeting will be in December in Vienna and will weigh the possibilities of even steeper production cuts for 2020.
Stocks Struggle on Trade Concerns
Stock markets have been pressured heavily by trade war concerns in recent months, and Thursday’s trading was no different. Japan’s Nikkei 225 hit a three-week low during the trading session as traders remained concerned that the trade deal is disintegrating. The index is on course for its biggest daily decline in seven weeks. By mid-afternoon it was down 0.48 percent. Hong Kong’s Hang Seng Index saw the steepest declines, trading down 1.61 percent, while South Korea’s Kospi trailed closely behind, trading down 1.53 percent. China’s benchmarks were both just under a half percentage point lower, and Australia’s ASX 200 was down 0.74 percent.
The currency markets saw little movement during Thursday’s Asian session. The dollar eased modestly against the yen, trading down 0.02 percent to 108.58. The British pound firmed against the dollar, trading up 0.03 percent to $1.2962, and the euro was up 0.02 percent against the greenback to $1.1074.