Oil prices edge higher as Saudi reassurances stem decline

Saudi Energy Minister Khalid Al-Falih

Information released Wednesday by the U.S. Energy Information Administration revealed commercial crude inventories surged by 6.8 million barrels in the week through May 31.

Futures strengthened slightly early in the session and then plunged after US inventory data was released.

"An escalation of the U.S". WTI ended $1.80, or 3.4%, lower at $51.68 a barrel.

Brent for August settlement dropped 20 cents to $61.08 a barrel on London's ICE Futures Europe exchange.

Crude stocks at the Cushing, Oklahoma, delivery hub for USA crude futures rose 1.8 million barrels to 50.8 million barrels, their highest levels since December 2017, the EIA said.

Actually, it's been a rough few weeks for crude oil.

"The stock build does not help sentiment in the current market environment", ING bank said.

Following Tuesday's API report, which showed that crude oil stocks in the USA grew by 3.5 million barrels in the week ending May 31, the EIA today announced that commercial crude oil inventories rose by 6.8 million barrels in the same period compared to analysts' estimate for a draw of 0.8 million barrels.

Iran's oil output has plummeted to a record low since 1990 in May as a result of US sanctions, Bloomberg reported on Monday June 3.

(Graphic: U.S. crude inventories, weekly changes since 2017 png link: tmsnrt.rs/2XlX17b).

Oil steadied after plunging 10 per cent in four days as investors weighed the prospect of a sharp slowdown in global economic growth due to trade frictions against Saudi Arabia's pledge to maintain market stability.

Saudi Arabia, the de-facto leader of the Organisation of the Petroleum Exporting Countries (OPEC), indicated that the group of oil producers together with Russian Federation would continue managing global crude supplies to avoid a surplus.

Oil has fallen nearly 20% from a peak in late April, taking it to the brink of a bear market, as trade relations between Washington and Beijing soured and the White House announced tariffs on Mexican goods.

The group will set its policy when it meets later this month or in early July.

But the head of Russia's top state producer Rosneft, Igor Sechin, said on Tuesday Russia should pump at will and he would seek compensation from the government if cuts were extended.

"The downside would be limited as supplies are tight, thanks to the OPEC/non-OPEC cuts plus a clutch of unavoidable output declines and outages", said Vandana Hari, an independent energy analyst and founder of Vanda Insights.

After the data, US crude dropped 3.7%, or $1.96, to $51.52 a barrel while Brent crude was down $1.50, or 2.4%, at $60.46 a barrel as of 11:04 a.m. EST (1504 GMT).

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