(Bloomberg) -- Oil slumped as U.S. crude inventories rose by the most since November, raising concerns about oversupply.
Futures fell 0.3% in New York on Wednesday. The Energy Information Administration reported that American crude stockpiles rose by 3.55 million barrels, more than analysts anticipated. Gasoline supplies reached a record high. The builds overshadowed growing tensions in the Middle East after an attack on Saudi Aramco’s Jazan plant by Yemen’s Houthi rebels sparked a brief price rally.
“That overhang of supply is hyper visible in the market,” said Ian Nieboer, managing director at RS Energy Group. “That fear has almost inoculated the market from these big upward swings,” he said.
Global benchmark crude prices managed to advance on the back of the potential escalation of conflict in the Middle East, diverging from West Texas Intermediate futures.
West Texas Intermediate crude for March delivery lost 15 cents to $53.33 a barrel on the New York Mercantile Exchange.
Brent for March settlement rose 30 cents to $59.81 a barrel on the London-based ICE Futures Europe exchange and traded at a $6.48 premium to the U.S. benchmark.
Investors also are weighing demand concerns as China, the world’s biggest consumer of oil, tries to contain the Coronavirus outbreak. Confirmed cases have soared to over 6,000 people, surpassing the official number of infections in the country during the SARS epidemic. The increase prompted the World Health Organization to call a meeting on Thursday to consider issuing a global alarm.
Though the long-term impact of the coronvirus is unclear, the market is nevertheless being “weighed down by fears of demand destruction,” said Ellen Wald, president of Transversal Consulting and a nonresident fellow at the Atlantic Council’s Global Energy Center.
--With assistance from James Thornhill, Grant Smith and Ann Koh.
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