© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford
By Arathy Somasekhar
(Reuters) – Oil prices dipped in early trade on Thursday for the third straight session after data showed an unexpected, large build in stocks last week, triggering fears of an oversupply amid signs of weaker Chinese demand, too.
futures for August delivery fell 40 cents, or 0.6% to $72.20 a barrel by 0023 GMT, while U.S. West Texas Intermediate crude (WTI) eased 39 cents, or 0.6%, to $67.70 a barrel.
Both benchmarks had settled down more than $1 on Wednesday after steep declines the day before.
U.S. crude oil inventories rose by about 5.2 million barrels last week, according to market sources citing American Petroleum Institute figures on Wednesday. That compared with estimates in a Reuters poll for a drawdown of 1.4 million barrels. [API/S]
In a further bearish sign, gasoline inventories also posted a surprise build of about 1.9 million barrels in the week ended May 26, according to the data, compared with estimates for a draw of about 500,000 barrels.
Market participants now await government data on U.S. crude stocks due later on Thursday. The data was delayed by a day because of a U.S. holiday earlier this week. [EIA/S]
Meanwhile, Chinese data showed manufacturing activity contracted faster than expected in May, worrying markets about demand in the world’s second-largest oil consumer.
Investors were also watching the upcoming June 4 meeting of OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia, after mixed signals so far on whether further cuts are likely.
Analysts at HSBC and Goldman Sachs (NYSE:) have said they do not expect OPEC+ to announce further cuts at this meeting.
Unexpectedly strong labor market data on Wednesday also rattled investors who fear the Federal Reserve might hike interest rates again in June, potentially cutting fuel demand in the U.S., the world’s biggest oil consumer.
A bill to suspend the U.S. government’s $31.4 trillion debt ceiling and avert a disastrous default cleared a key procedural hurdle in the House of Representatives on Wednesday, setting the stage for an vote on the bipartisan debt deal itself.