Economy

Crude Oil Inventories Increase by 1.6 Million Barrels

Crude Oil Inventories Increase by 1.6 Million Barrels

US West Texas Intermediate Crude futures shed 3.3%, dropping to $55.23 a barrel.

Profit taking after Tuesday's sharp gains also weighed on crude prices on Wednesday, analysts said.

The global oil benchmark, Brent crude, had tumbled last week Wednesday to $56 per barrel, its lowest level in seven years as the United States-China trade war worries gripped the market.The decline in oil price imposes a serious threat to Nigeria's economy as the 2019 budget is based on an oil benchmark of $60 per barrel.

"The U.S. -China trade war has caused energy demand growth to take a big hit".

Brent crude LCOc1 was down $2.59, or 4.2%, to $58.71 a barrel, by 11:45 a.m. EDT (1545 GMT), almost erasing the previous session's sharp gains after the United States moved to delay tariffs on some Chinese products.

Optimism swept across financial markets after the US postponed tariffs on some Chinese goods and the Asian powerhouse said the two sides will hold new talks in two weeks. -China trade dispute and uncertainty over Brexit, as well as rising US stockpiles of crude and higher output of USA shale oil.

Oil prices fell on Wednesday on disappointing economic data from China and a rise in USA crude inventories, erasing some of the sharp gains in the previous session after the US said it would delay tariffs on some Chinese products, easing trade tensions.

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USA crude stocks grew by 1.58 million barrels (Mmbbl) last week compared with analysts' expectations for a drop of 2.8 Mmbbl as refineries cut output, the Energy Information Administration said.

According to the EIA, total motor gasoline inventories decreased by 1.4 million barrels last week and were about 4 percent above the five-year average for this time of year.

Brent crude oil futures rose 4.7% to US$61.30 a barrel, making it the largest daily percentage gain for Brent since December when it rose by 7.9%.

Both reports underlined the widening economic cracks as the trade war between the United States and China intensifies.

China's on Thursday vowed to counter the latest U.S. tariffs, but called on the United States to meet it halfway on a potential trade deal, as U.S. President Donald Trump said any pact would have to be on America's terms.

The price of Brent is still up 10 percent this year thanks to supply cuts led by the Organization of the Petroleum Exporting Countries and allies such as Russian Federation, a group known as OPEC+.