U.S. crude oil production increased slightly during the week ending August 2, U.S. Energy Information Administration (EIA) said Wednesday.
The oil markets extended losses after U.S. government data showed that United States crude stockpiles rose unexpectedly last week, increasing 2.4 million barrels, compared with analysts' expectations for a decrease of 2.8 million barrels. The oil market moves today based on President Trump's tweets about trade negotiations and China's responses to USA actions.
This week, the EIA reduced its forecast US demand for crude and liquid fuels.
The US, domestic crude inventories expanded by 2.39 million barrels, snapping a seven-week string of declines.
EIA also estimated that USA crude oil production will average 11.7 million b/d in July 2019, down by 0.3 million b/d from the June level.
On the strength of IEA data showing that demand to May from January grew at its slowest since 2008, hurt by mounting signs of an economic slowdown and intensification of the U.S.
In Asia, stocks were slightly lower late Wednesday as traders held their breath for a week-long sell-off, with efforts initiated by Chinese finance experts to put a lid on a weakening yuan, which traded at 7 to the U.S. dollar level and triggering a global selloff in equities and oil. Weak demand in established markets is spurring the company to focus on emerging economies, he said.
US stocks were higher late Wednesday but were not as close as their best levels for the quarter, as investors kept a tab on the latest Sino-US trade development.
OPEC and its allies including Russian Federation, agreed in July to increase they provide cuts until March 2020 to spice up oil costs.
Reports that Saudi Arabia, the world's biggest oil exporter, had called other producers to discuss the slide in crude prices have helped supported the market, traders and analysts said.
Global financial markets have been rocked over the past week after US President Donald Trump said he would impose 10% tariffs on more Chinese goods starting September and as a fall in the Chinese yuan sparked fears of a currency war. "How long OPEC+ is willing to continue to manage production adds uncertainty", said Bjornar Tonhaugen, head of oil market analysis at Rystad Energy. This could trigger another steep break in prices.
"We could keep following the trend lower", Graves said.
Furthermore, Goldman Sachs cut its US fourth-quarter growth forecast by 20 basis points to 1.8%, citing a larger than-expected impact of recent trade war events. This week, we're going to see if expectations of OPEC production cuts will be enough to provide support.