By Peter Nurse
Investing.com - Oil markets were mixed Thursday, with the U.S. WTI contract underperforming after industry data showed a steep and surprising build-up in crude stockpiles.
AT 9:10 AM ET (1310 GMT), U.S. crude futures traded 0.4% lower at $33.82 a barrel. The international benchmark Brent contract rose 2.3% to $35.38.
The industry-funded American Petroleum Institute reported late Wednesday that U.S. crude stockpiles rose 8.73 million barrels last week, a substantial difference from the 2.5 million barrel draw that the market was looking for.
Attention now turns to the government data, at 11 AM ET (1500 GMT), and if this build is confirmed it would reverse two weeks of inventory declines -- an indication that record supply cuts are not draining a massive supply glut fast enough.
Prices have rebounded strongly this month, as the Organization of the Petroleum Exporting Countries and producers including Russia, a grouping referred to as OPEC+, cut their output by nearly 10 million barrels per day in May and then also June.
Saudi Arabia and some other OPEC oil producers are also considering extending these record output cuts until the end of 2020, in the lead-up to its June 9 meeting, but doubts remain over Russia’s support given its desperate need for capital in the wake of the damage done to its economy in the wake of the coronavirus outbreak.
Investor sentiment has also been soured by rising Sino-U.S. tensions, with China’s parliament backing security legislation for Hong Kong, which critics fear will undermine the semi-autonomous status of the city.
A possible trade conflict between the two largest economies in the world would likely undermine any recovery in demand that looks like occurring as the global economy gradually reopens.
“Crude oil...has reached a consolidation stage. The global economic outlook and risk of new pockets of Covid-19 outbreaks will dictate the speed of demand recovery,” said Ole Hansen, an analyst at Saxo Bank.