By Barani Krishnan
Investing.com - Oil snapped a three-day rally on Tuesday as worries that U.S. stockpiles were headed for another record high pushed crude prices down despite President Donald Trump’s assurance that his trade deal with China was still on.
New York-traded West Texas Intermediate, the benchmark for U.S. crude futures, settled down 36 cents, or 0.9%, at $40.37 per barrel, the first slide after three sessions that delivered a total of 6.3% in gains for the contract.
London-traded Brent, the global benchmark for oil, settled down 35 cents, or 0.8%, at $42.73. It rose 5.6% in the last three sessions.
The White House’s stance on China was thrown into confusion late on Monday after trade adviser Peter Navarro announced a trade deal between the two countries was “over." China is the world’s largest buyer of oil and most commodities. Shortly after Navarro’s remarks, Trump tweeted: “The China trade deal is fully intact. Hopefully they will continue to live up to the terms of the agreement!”
The back-and-forth on China pushed oil prices lower in Tuesday’s early trade, before a rebound in New York’s mid-morning session.
However, as the market moved toward close, it slipped again as forecasters predicted that U.S. crude stocks might have hit another peak last week, building upon the previous week’s all-time high of of 539.3 million barrels.
The U.S. Energy Information Administration will report weekly data on petroleum supply-demand on Wednesday that will include an update on crude balances as well as stockpiles on gasoline and diesel-led distillates.
Analysts expect the EIA to report that crude stockpiles rose by 299,000 barrels for the week to June 19, after a gain of 1.2 million in the previous week to June 12.
Gasoline inventories are expected to have fallen by 1.3 million barrels, adding to the previous draw of nearly 1.67 million barrels.
Distillate stockpiles are forecast to have dropped by 620,000 barrels, extending the previous week’s 1.35-million barrel decline.
Tuesday’s price dip also came on the back of something else: Growing unease among some that the market had gone up too much in too short a time.
“We have more than doubled in prices in just two months,” said Gene McGillian. vice president of research at Tradition Energy in Stamford, Connecticut. “Something’s gotta give, with the market not completely out of the woods yet.”