WTI crude prices dropped amid the uncertainty over phase one trade deal signing. US West Texas Intermediate crude futures lost 15 cents or 0.3% at $58.08 per barrel.
Meanwhile, Brent crude slipped 16 cents or 0.3% at $64.33 per barrel.
The American Petroleum Institute has estimated a crude oil inventory build of 1.1 million barrels last week. This figure goes in contrast to the expectations of a draw.
For last week, too, the API also reported a build of 3.2 million barrels of gasoline. It came after the previous week’s sizeable 6.7-million-barrel build.
At the same time, distillates inventories gained by 6.8 million barrels for the week. These barrels added to last week’s 6.40-million-barrel build. Cushing inventories saw no change.
Meanwhile, analysts said that crude oil futures, including WTI crude, were in oversold territories.
Chinese Refineries Surge
Over in China, markets expect refined oil exports will soar in 2020 due to persistent overcapacity. The China National Petroleum Corp report also expects 170 million tons of refining capacity to sit idle.
Total Chinese refining capacity will grow by 27 million tons, reaching 887 million tons in 2020. This rise could push exports up 18% to 64.5 million tons from last year’s 54.66 million tons.
Such statistics could put China in a position to overtake South Korea as the largest exporter of oil in Asia-Pacific.
On the flip side, the oil refineries report also estimates 170 million tons of that will be idle. That’s a 13.4% jump from 2019.
Also, Chinese refineries are finding it more challenging to profit from exports. From the Middle East and India, large-scale refineries will come online. And this would tighten the already-tense competition in the market.
Weaker domestic demand coincides with the increase in excess capacity. China’s demand for refined oil will sit around 393 million tons in 2020. That’s a drop from the 4.7% growth in 2019 to 2.3% this year.
While Oil Prices Fall, Gold Perks Up
While WTI crude fell, gold prices gained traction, ending its two-day losses. Investors flocked the safe-haven asset amid the new uncertainties about the US-China trade deal.
US gold futures fetched 0.6% to $1,553.
Traders were on careful footing before the signing of the phase one trade deal.
US Treasury Secretary Steven Mnuchin said that tariffs on Chinese goods would stay in place until after the phase two agreement.
Meanwhile, a news report said phase two talks wouldn’t start until after the presidential election in November.
Earlier this month, the precious metal rose as US-Iran tensions flared up over the killing of a top Iranian general. The tensions drew safe-haven demand.
WTI crude and other oil price benchmarks rose sharply amid those tensions.
Elsewhere in the commodities market, OPEC+ was considering delaying the decision on whether to extend output curbs, according to Russian media.
According to the report, OPEC was planning to push back a critical meeting until June to make up its mind. Analysts said that this would be bearish for the market as there would be a second-quarter oil surplus.
If they keep the deal until June, however, it would be “more constructive for the market.”