Oil prices were mixed in choppy trade on Wednesday, after government data showed a surge in weekly U.S. crude stockpiles that was partly offset by a drop in the nation’s inventories of refined fuel.
A drop in U.S. equity indexes also weakened sentiment in crude prices.
U.S. West Texas Intermediate crude futures settled 34 cents lower at $56.22 per barrel, off a session low at $55.42. International Brent crude futures up 11 cents at $65.97 per barrel around 2:30 p.m. ET.
U.S. crude inventories rose by 7.1 million barrels in the week ending March 1, the U.S. Energy Information Administration reported. That compared with analysts’ expectations for a modest increase of 1.2 million barrels in a Reuters poll.
Meanwhile, the nation’s gasoline inventories fell by 4.2 million barrels and stocks of distillate fuel including diesel were down 2.4 million barrels.
“A big rebound in U.S. crude oil imports, combined with a drop in exports led to the large increase in domestic inventories,” said David Thompson, executive vice president at Powerhouse, an energy-specialized commodities broker in Washington. “Demand for refined products remains decent.”
Crude futures also tracked a slump in U.S. equities, which sputtered without positive developments in trade talks between Washington and Beijing.
“I think there’s a little less optimism in relation to the U.S.-China trade negotiations,” said Tony Headrick, energy market analyst at commodity brokerage CHS Hedging LLC. “It has sort of gone quiet, so I think equities are continuing to provide an influence here.”
EIA will also issued its latest estimate on weekly U.S. oil production on Wednesday. The preliminary figures showed American output at 12.1 million barrels per day, matching last week’s record.
Chevron Corp and Exxon Mobil Corp released rival Permian Basin projections on Tuesday pointing to increased shale oil production.
The increases would cement the pair as the dominant players in the West Texas and New Mexico field, with one-third of Permian production potentially under their control within five years.
The rise in North American production undermines the ongoing supply cut efforts led by OPEC.
OPEC and its allies pledged to curb output by 1.2 million barrels per day, and they are likely to push back their decision whether or not to extend the output cut agreement to June from April, according to sources.
Meanwhile, the market is looking for further signs that the United States and China are making progress in talks to resolve their trade conflict.
U.S. Secretary of State Mike Pompeo said President Donald Trump would reject any trade deal that is not perfect, but added the White House would keep working on an agreement.