By David Hodari
Oil prices dropped sharply Wednesday as data showing inventories rose last week reinforced concerns over slowing global demand.
West Texas Intermediate futures fell 2.7% to $51.80 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, was down 2.2% at $60.92 a barrel on London's ICE Futures exchange.
U.S. crude-oil stockpiles rose by 2.2 million last week, data from the U.S. Energy Information Administration showed Wednesday. Analysts and traders surveyed by the Journal expected stockpiles to fall by 600,000 barrels. Prices were already lower before Wednesday's report and maintained those losses afterward.
Worries over slowing global growth have weighed on crude prices in recent weeks, stoked by an escalated trade conflict between the U.S. and China that investors increasingly believe will hurt demand for oil and other raw materials.
Brent crude has sold off by around 13% in the past month, while WTI futures are down roughly 15%.
The EIA on Tuesday lowered its forecast for global oil demand growth in 2019 to 1.2 million barrels a day, a 14% cut from the prior month's forecast, playing into persistent worries about the health of global economic growth.
Weakening economic figures out of China have prompted its government to issue waves of stimulus measures, with the latest coming this week. Still, oil markets have shrugged off Beijing's attempts to support the economy.
"I'm puzzled the stimulus measures didn't cause the usual positive and it's that growth pessimism that continues to pressure oil," said Norbert Rücker, head of commodities research at Julius Baer.
Sagging demand has prompted unseasonable builds in inventories. U.S. crude-oil inventories are about 8% above the five year average for this time of year and stand at a nearly two-year high.
While steep declines have calmed in recent sessions, Wednesday's drop brought oil prices back to the bottom of their recent price range.
Oil prices could receive a further jolt in the coming weeks, with signals out of major producing nations becoming increasingly divergent ahead of a summit between the Organization of the Petroleum Exporting Countries and its allies in Vienna due to take place at the end of the month.
Comments from Saudi officials this week have suggested participants were close to agreeing an extension to the continuing OPEC+ production cut, but remarks from Russian oil market figures have contradicted that message.
With question marks hanging over the date of the conference, "when they do have the meeting, we could see some pretty tough negotiations," said Warren Patterson, commodities strategist at ING. "The Rosneft CEO has suggested an extended cut would give more market share to the U.S. and a scenario when they don't extend cuts is not going to be pretty."
--Ira Iosebashvili contributed to this article.
Write to David Hodari at David.Hodari@dowjones.com
(END) Dow Jones Newswires
June 12, 2019 11:42 ET (15:42 GMT)
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