Oil Dips as U.S. Inventories Gain And Trump Demands Lower Prices

(Bloomberg) -- Oil traded below $55 a barrel as expanding American crude inventories added to the bearish sentiment with another tweet from Donald Trump calling for even lower prices.

Futures fell as much as 0.6 percent in New York, after Wednesday’s 2.3 percent gain pared some of the losses from a rout earlier this week. America’s crude inventories increased for a ninth straight week, the longest rising streak since March 2017, according to government data released Wednesday. Meanwhile, President Trump thanked Saudi Arabia for lower oil prices in his tweet, but also said “let’s go lower!”

Crude entered a bear market this month on concerns over a potential supply glut. While traders expect Iranian oil to flow back into the market under America’s temporary waivers to some nations, the Organization of Petroleum Exporting Countries and its allies will seek ways to reach a balance when they meet next month in Vienna. All options are on the table for the producer group’s discussion, ranging from no cuts to a joint reduction of 1.4 million barrels a day, according to Citigroup Inc.

“Stakes are being raised after Trump’s comment and certainly the market is a little bit concerned that Saudi Arabia might not drive a strong stance around production cuts,” Daniel Hynes, a senior commodities strategist at Australia & New Zealand Banking Group Ltd., said by phone from Sydney. “Prices have probably found a base here and they’re going to offload around it until they see details on the supply side.”

West Texas Intermediate for January delivery lost as much as 35 cents to $54.28 a barrel on the New York Mercantile Exchange, and was at $54.44 at 11:55 a.m. in Singapore. There will be no settlement for the contract Thursday due to U.S. Thanksgiving holiday. The contract rose $1.20 to $54.63 on Wednesday, after plunging 6.6 percent in the previous session. Total volume traded was 29 percent below the 100-day average.

See also: OPEC Will Struggle to Muster Friends for Oil Cuts: Julian Lee

Brent for January settlement dropped 18 cents, or 0.3 percent, to $63.30 a barrel on the London-based ICE Futures Europe exchange. The contract settled 1.5 percent higher at $63.48 on Wednesday. The global benchmark crude traded at a $8.86 premium to WTI for the same month.

In the U.S., nationwide inventories rose 4.85 million barrels last week to about 447 million barrels, according to Energy Information Administration data. That’s a bigger than a 3.45-million-barrel gain expected in a Bloomberg survey. Still, that was about half the increase of the prior week and gasoline and distillate stockpiles declined, suggesting demand for petroleum remains resilient.

Trump said earlier he won’t let the killing of U.S.-based journalist Jamal Khashoggi jeopardize America’s relations with Saudi Arabia as oil prices may “go through the roof.” His tweet came after the kingdom’s crude output was said to surge to a record near 11 million barrels a day this month, following stronger-than-usual demand from its clients who were preparing for a disruption in Iranian supplies.

©2018 Bloomberg L.P.