Investing.com - U.S. crude oil inventories unexpectedly increased last week, the Energy Information Administration said in its weekly report on Friday.
The EIA data showed that crude oil inventories advanced by 0.007 million barrels in the week to Dec. 28.
That was compared to forecasts for a stockpile draw of 3.09 million barrels, after a drop of 0.05 million barrels in the previous week.
Data was released later than usual due to the New Year’s holiday. The EIA is not affected by the partial government shutdown because it already has appropriations for fiscal 2019.
Oil prices were nearly 4% higher ahead of the data after China’s Commerce Ministry confirmed in a statement Friday that the U.S. and China would begin another round of trade talks on Jan. 7-8.
China’s manufacturing sector saw a contraction in December, with weakness attributed to the ongoing trade tensions with the U.S. The prospect for slower global economic growth would have a negative effect on oil prices due to the potential for softer petroleum demand, particularly from China which is the world’s largest oil importer.
“Recent Chinese data is not confirming the doom-and-gloom trend,” said Olivier Jakob, oil analyst at Petromatrix. "And you've got OPEC cutting."
OPEC, Russia and other non-members, known as OPEC+, agreed in December to reduce supply by 1.2 million barrels per day (bpd) in 2019. OPEC's share of that cut is 800,000 bpd.
A Reuters survey on Thursday found OPEC supply fell by 460,000 bpd in December, following assessments by Bloomberg and JBC Energy also showing a sizeable decline although it was noted that part of that amount was due to disruptions in Iran and Libya, making some analysts cautious.
“Isolating the participating countries indicates their output would need to fall a further 940,000 bpd to be in adherence with their targets,” U.S. investment bank Jefferies said.
“OPEC+ strategy for supporting prices over market share is not working. Not only are oil prices down nearly 40% since last October 2018, they are in fact now below where they were when the group began their first iteration of output cuts back in January 2017,” said MUFG bank.
-- Reuters contributed to this report