Oil slides despite steep draw in U.S. crude stocks

Oil prices fell more than 1 percent on Wednesday even though U.S. crude stockpiles dropped from the most in a year, since data indicating national production has been edging higher stoked worries about the international crude glut.

Brent crude futures settled down 53 cents, or about 1 percent, at $50.27 per barrel. U.S. West Texas Intermediate (WTI) crude futures settled at $46.78 a barrel, down 77 cents, or 1.6 percent.

U.S. crude inventories fell for a seventh consecutive week, falling 8.95 million barrels last week to 466.5 million barrels to their lowest since January 2016, the Energy Information Administration said. Including emergency reserves, crude stocks were at 1.15 billion barrels, the lowest since October 2015.

However, gas inventories did not decline as expected, and the data also revealed that U.S. crude output rose to 9.5 million barrels every day from 9.4 million a week earlier.

Growing U.S. output could add to global oversupply that prompted the Organization of the Petroleum Exporting Countries and other oil producers to curtail production to boost prices.

Traders weighed the U.S. stockpile draw from the production data.

Gene McGillian, director of market research at Tradition Energy, noted that {}, U.S. demand peaks during the summer. “If we see these attractions past Labor Day, it is going to drive the marketplace, maybe past $50.

Matt Smith, director of commodity research at ClipperData, noted that “The peak of summer driving season has passed, and demand for crude ought to wane also as refinery runs fall. Gas demand will ebb as summer road trips are for the most part over and kids return to school.”

U.S. gas stocks were unchanged, compared with expectations at a Reuters poll for a 1.1 million-barrel fall.

Other manufacturers including Russia and OPEC have pledged to limit output. However, U.S. oil production has surged nearly 12 percent since mid-2016. Lt;C-OUT-T-EIAgt; “OPEC and Russia still face an uphill struggle in reducing the global supply surplus in the face of growth in output elsewhere and less than compliant behaviour in their center (Iraq, UAE),” French bank BNP Paribas said.

OPEC member Angola published a loading strategy showing were intended at a high.

On the demand side, analysts see a downturn in gas consumption development.

Energy consultancy Wood Mackenzie said U.S. gas demand was peaking because of improving fuel efficiency and the growth of electric vehicles. In China, state-owned China National Petroleum Corporation (CNPC) said gas demand would likely peak around 2025 and petroleum consumption would top out around 2030.

This implies oil need from the world’s two largest consumers may stall. Consumption has peaked in Japan and Europe.

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