(Bloomberg) -- Oil prices retreated in Asia after a report showed a rise in U.S. crude stockpiles and President Donald Trump said he’s halting stimulus talks until after the election, sapping optimism for a much-needed boost in demand.
Futures in New York dropped as much as 2.5%, after gaining 3.7% on Tuesday. Trump told his negotiators to stop talks with Democratic leaders on a fiscal stimulus package until after the election, which also caused stocks to tumble and bonds to soar. The move came just hours after Federal Reserve Chair Jerome Powell stepped up his call for greater spending to avoid damaging the economic recovery.
U.S. crude inventories swelled by nearly a million barrels last week, the latest American Petroleum Institute report showed, according to people familiar. That would be the first rise in four weeks, if confirmed by government data later in the week, although gasoline and distillate supplies tightened to offer some grounds for optimism on the demand outlook.
Oil is finding some support from the risk to production facilities in the Gulf of Mexico from the approaching Hurricane Delta. U.S. Gulf operators have shut 29% of oil output in the region as the storm strengthened to a Category 4 and is expected to move through the U.S. Gulf before hitting Louisiana. Saudi Arabia’s move to boost prices slightly for its flagship crude oil shipped to Asia also signaled some strength in the physical market.
Refining margins for both gasoline and distillate have rallied this week, with the Nymex gasoline crack trading near $11 a barrel and the distillate crack up over $9 a barrel. The combined refining margin for both fuels has recovered to over $10 a barrel, though it remains at its lowest seasonally since 2010.
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