(Bloomberg) -- Oil maintained its decline to $52 a barrel in New York Wednesday as U.S. crude stockpiles grew to the highest in almost two years and the China-U.S. trade war continued to put pressure on demand.
Futures lost as much as 3.4% in New York on Wednesday after the Energy Information Administration said inventories rose 2.21 million barrels last week. That was in contrast to analysts surveyed by Bloomberg, who had expected a 1 million-barrel drop. Almost all of the increase was at the Cushing, Oklahoma, supply hub, further weighing on prices.
“It was disappointing to see another crude oil build, especially when there was at least a slight draw that was expected,” said Brian Kessens, portfolio manager and managing director at Tortoise in Leawood, Kansas. “The build can nearly all be attributed to Cushing. Possibly some of the Midcontinent refineries were still disrupted from the rainfall.”
Oil has slipped about 20% since late April as the entrenched trade war dents demand. The U.S. and China remain at loggerheads over trade and President Trump has said he’s personally holding up a trade deal with China unless it returns to terms negotiated early in the year.
The Organization of Petroleum Exporting Countries and its allies are very close to reaching an agreement to extend output cuts, according to the United Arab Emirates, even as the group struggles to set a date for its next meeting. The big issues for the alliance are rising inventories and the risk of slowing demand growth.
West Texas Intermediate futures for July delivery fell $1.24, or 2.3%, to $52.03 a barrel on the New York Mercantile Exchange at 11:12 a.m. local time, after dropping as much as $1.81 earlier.
Brent for August settlement declined $1.17, or 1.9%, to $61.12 a barrel on London’s ICE Futures Europe Exchange. The global benchmark crude traded at an $8.85 premium to WTI for the same month.
See also: Oil Demand Signals Are Flashing Red as Price Dives Toward $50
U.S. crude stockpiles rose to the highest since July 2017 in the week through June 7. The EIA said stockpiles at Cushing, the largest U.S. supply hub, grew 2.1 million barrels, the biggest increase since February.
Trade talks with China broke down last month after Washington accused Beijing of reneging on provisions of a tentative trade deal. Trump told reporters at the White House Monday that he could levy tariffs of 25% or “much higher than 25%” on $300 billion in Chinese goods if his counterpart, President Xi Jinping, doesn’t meet with him at the Group of 20 summit in Japan later this month.
--With assistance from Grant Smith and Heesu Lee.
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