Oil falls more than 5% to post biggest 2019 weekly loss

Oil prices extend decline on growing supplies

Oil prices drop three per cent to $70

USA crude oil inventories rose last week, hitting their highest levels since July 2017, due to weak refinery demand, the Energy Information Administration said on Wednesday.

Brent crude futures, the worldwide benchmark, settled down US$3.23, or 4.6 per cent, at US$67.76 a barrel.

The American Petroleum Institute (API) said on Tuesday that US crude stockpiles rose by 2.4 million barrels last week, to 480.2 million barrels, compared with analyst expectations for a decrease of 599,000 barrels. US West Texas Intermediate crude added $0.75 at $58.66.

Weekly U.S. rig count data, an indicator of future output, showed U.S. energy firms this week reduced the number of oil rigs operating for a third week in a row.

US-China trade jitters keep weighing on crude oil.

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Economic worries fed by U.S.

Beyond weak refinery demand for feedstock crude oil, the increase in commercial inventories also came on the back of planned sales of USA strategic petroleum reserves (SPR) into the commercial market.

Some analysts expect gains to be short-lived.

The Organization of the Petroleum Exporting Countries and allies including Russian Federation, an alliance known as OPEC+, have been cutting supply since January to tighten the market and prop up prices.

"A decline below our expected next support level of $56 (for WTI) will likely associate with a further plunge in equities that would be heavily related to unresolved trade issues between the USA and China. volatility across all markets will be heightened until some significant trade progress is seen". Oil tanks along China's eastern seaboard are filling up as the effects of the trade war trickle down into the real economy and sap demand for fuels, making life tough for the country's independent refiners.

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The government also reported that US crude oil production climbed by 100,000 barrels per day (bpd) to 12.2 million bpd.

One sign of a tight supply is the Brent crude oil futures backwardation.

The move put pressure on London oil stocks, with Premier Oil, Gulf Marine Services, Tullow Oil, Nostrum Oil and Gas, and Enquest all among the biggest fallers on the London Stock Exchange this afternoon.

OPEC heavyweight Saudi Arabia signaled that it could extend the supply cut agreement into the second half of this year to support oil prices. In the event of tariffs, crude oil bound for China could simply be sent to other markets - and Chinese importers could meanwhile replace the US crude with other sources.

By way of a reminder, at the end of past year, a "glut" is reported to have helped contribute to the fact that oil prices took a significant tumble to that $45 per barrel mark, that we all would like to forget happened.

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