Oil prices fell about 1 percent on Wednesday as a surprise increase in U.S. crude stockpiles and growing OPEC production fed worries that global supplies could swell, while investors continued to worry that trade tensions could hit energy demand.
Brent crude LCOc1 futures fell $1.13 to $73.08 a barrel, a 1.5 percent loss, by 10:58 a.m. EDT (1458 GMT).
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 67 cents to $68.09 a barrel, a 1 percent loss.
U.S. crude inventories USOILC=ECI rose 3.8 million barrels in the week to July 27 as imports jumped, the government’s Energy Information Administration (EIA) said. Analysts polled by Reuters had expected a decrease of 2.8 million barrels.
Still, oil futures pared losses after the data, which also showed growing U.S. demand.
“Demand for crude oil from refiners is very high, and gasoline demand remains sky-high as well,” said John Kilduff, partner at Again Capital Management in New York. “U.S. oil production growth appears to have stalled out and actually declined a fair amount on the week.”
Refinery crude runs USOICR=ECI rose by 195,000 barrels per day (bpd), while gasoline stocks USOILG=ECI declined 2.5 million barrels, EIA data showed.
On Tuesday, EIA reported that U.S. crude production fell 30,000 bpd to 10.44 million bpd in May.
Oil prices are also being pressured by concern that global trade tensions could crimp economic growth.
“Ratcheting up of trade tensions between the U.S. and China has brought oil prices under significant selling pressure,” said Abhishek Kumar, senior energy analyst at Interfax Energy. “Market participants are awaiting additional tariffs by the U.S. on the next tranche of imported goods from China.”
Last month, Brent fell more than 6 percent and U.S. crude slumped about 7 percent, the biggest monthly declines for both benchmarks since July 2016.
On Wednesday, a Kuwaiti official said the country increased production in July by 100,000 bpd from June’s average.
On Monday, a Reuters survey found that OPEC production reached a 2018 high in July. The Organization of the Petroleum Exporting Countries, plus Russia and other allies, decided in June to ease supply cuts in place since 2017.
Oil prices also were pressured by signs that a supply disruption in the Bab al-Mandeb Strait in the Red Sea could be resolved.
Yemen’s Houthi group said it was ready to halt attacks in the Red Sea to support peace efforts. Saudi Arabia had suspended oil shipments through the strait last week after attacks on tankers.
