Oil prices fall on rise in U.S. stocks, demand worries
We’re headed for higher oil prices over the long term: John Hofmeister
Former Shell Oil President John Hofmeister on the outlook for oil prices.
Oil prices fell on Wednesday after news of a rise in U.S. crude inventories last week, defying analysts' expectations for a big fall, while concerns about weak demand also resurfaced.
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Brent crude oil was down 60 cents at $71.56 a barrel by 0750 GMT. The benchmark hit a three-month low on Tuesday.
U.S. light crude was down 50 cents at $67.58, not far off Tuesday's one-month low of $67.03 per barrel.
Oil markets have fallen over the last week as Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries and Russia have increased production and as some supply disruptions have eased.
Investors have also begun to worry about the impact on global economic growth and energy demand of the escalating trade dispute between the United States and its trading partners, including China.
The U.S. oil market has been tight in recent months but data on Tuesday from the American Petroleum Institute (API) showed an unexpected a rise of more than 600,000 barrels in national crude inventories.
Analysts had forecast a decline of 3.6 million barrels in U.S. crude stocks for the week through July 13.
Official numbers from the U.S. Department of Energy's Energy Information Administration are due at 10:30 a.m. EDT (1430 GMT) on Wednesday.
"Oil is trading lower this morning on the back of the API release, and price action later today will largely depend on what the EIA release," said ING commodities strategist Warren Patterson. "A number broadly similar to the API could put some further pressure on the market later this afternoon."
On the demand-side, intensifying risks over trade tensions between the United States and China could drag on the global economic outlook, BMI Research said.
"The economic outlook is broadly positive, but a number of headwinds are emerging, not least a stronger dollar, rising inflationary pressures and tightening liquidity," BMI said. "Slowing trade growth will weigh on physical demand for oil."
Kansas City Federal Reserve Bank President Esther George said on Tuesday uncertainty over U.S. trade policy could slow the economy, even if the recently imposed tariffs in and of themselves are too small to have a big impact.
Trade policy was a "significant" downside risk to the outlook for economic growth, George said.
(Reporting by Aaron Sheldrick in Tokyo and Christopher Johnson in London; editing by Jason Neely)
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