OIL SLIPS AS US INVENTORIES RISE

Oil prices edged lower on Wednesday as government data showed a surprise rise in U.S. crude inventories and as tensions escalated between the United States and China, Jessica Resnick-Ault reported for Reuters late on July 22, 2020.

Brent crude futures settled down 3 cents at $44.29 a barrel, while U.S. West Texas Intermediate crude settled down 2 cents at $41.90 a barrel.

US crude and distillate inventories rose unexpectedly and fuel demand slipped in the most recent week, the Energy Information Administration said on Wednesday, as the sharp outbreak in coronavirus cases has started to hit US consumption. Crude inventories rose by 4.9 million barrels in the week to July 17 to 536.6 million barrels, compared with expectations in a Reuters poll for a 2.1 million-barrel drop. Production rose to 11.1 million barrels per day, up by 100,000 barrels per day. “Overall, this would suggest that the demand recovery we’ve seen from the bottom seems to be stalling,” said Phil Flynn, senior analyst at Price Futures group in Chicago.

However, a fresh dispute between Washington and Beijing put pressure on prices after the United States told the Chinese consulate in Houston to shut and a source said China was considering closing the US consulate in Wuhan. Adding to pressure were signs that Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries, was still not meeting its target under an OPEC-led pact to cut supplies.