Oil skids as U.S. inventories pile up, but demand hopes stem bigger drop

Oil prices dropped on Wednesday after U.S. industry data showed a surprise build in crude inventories, but expectations for firmer demand next year kept losses in check. Brent crude futures LCOc1 dropped 38 cents, or 0.57%, to $65.72 a barrel by 0730 GMT on Wednesday. The international benchmark rose 1.2% to $66.10 a barrel on Tuesday.

West Texas Intermediate (WTI) crude futures CLc1 fell 46 cents, or 0.75%, to $60.48 per barrel. Wednesday’s declines followed a gain of more than 1% in the previous session as the “phase one” U.S.-China trade deal announced last week eased pressure on the oil benchmarks. Prior to the agreement, oil markets were hampered by worries over the economic impact of the trade dispute between the world’s two biggest oil consumers.

U.S. crude inventories climbed 4.7 million barrels in the week to Dec. 13 to 452 million, compared with analysts’ expectations for a draw of 1.3 million barrels, data from industry group the American Petroleum Institute showed. But a drop in official inventory data from the U.S. Energy Information Administration (EIA) due later on Wednesday could give oil more upward impetus, said Jeffrey Halley, senior market analyst for Asia Pacific at OANDA. OPEC+, which has cut production by 1.2 million barrels per day (bpd) since Jan. 1 this year, will make a further oil supply cut of 500,000 bpd from Jan. 1, 2020, to support the market.