(Bloomberg) -- Oil extended losses after an industry report showed a surprise jump in U.S. crude stockpiles last week.
West Texas Intermediate crude futures fell as much as 3.2% after the close in New York. The industry-funded American Petroleum Institute reported that U.S. crude stockpiles rose 8.73 million barrels last week, according to people familiar with the data. Gasoline supplies also gained 1.12 million barrels, according to the report.
If confirmed by government data Thursday, the crude build would reverse two weeks of inventory declines -- an indication that record supply cuts are not draining a massive supply glut fast enough. While oil has rallied about 70% this month, the market’s recovery from an historic crash remains fragile, with higher prices likely prompting producers to turn the taps back on even as the pandemic continues to quash energy demand.
The API report also showed supplies at the key storage hub of Cushing, Oklahoma, fell by 3.37 million barrels, which would be the third consecutive weekly decline. The Energy Information Administration will release its weekly inventory report Thursday morning.
OPEC+’s deal to cut global output by almost 10 million barrels a day starting in May has helped to lift prices from April lows. Russian President Vladimir Putin and Saudi Arabia’s Mohammed bin Salman on Wednesday reiterated their cooperation on the agreement ahead of a June 9-10 meeting.
Still, oil slipped from an 11-week high to close lower Wednesday, with investors uncertain about Moscow’s commitment to extending the deal that expires in July. The last time Russia and Saudi Arabia failed to agree on market action, the fallout culminated in a devastating price war that dragged oil prices to historic lows.
“It’s really important to provide stability in the market going forward and have some kind of coordinated effort together that helps not only Russia but OPEC and provides stability in the prices,” said Phil Streible, chief market strategist for Blue Line Futures LLC.
Separately, the U.S. is considering a range of sanctions to punish China for its crackdown on Hong Kong, including controls on transactions and freezing assets of Chinese officials and businesses. Additionally, the U.S. certified Wednesday that Hong Kong is no longer politically autonomous from China. The deteriorating relationship between the world’s two largest economies could complicate the market’s comeback from a historic demand crash.
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