(Bloomberg) -- Oil extended declines on signals that crude inventories expanded last week in the world’s biggest economy.
Futures dropped as much as 1% in New York late Tuesday after the American Petroleum Institute was said to report a 1.38-million barrel increase in oil stockpiles. That followed a 2.3% price decline during the regular trading session in response to a hardline United Nations speech by President Donald Trump that excoriated China and accused Iran of “menacing behavior.”
Meanwhile, traders are closely tracking Saudi Arabia’s progress in restoring key crude installations crippled by aerial attacks more than a week ago. State-controlled oil producer Aramco has maintained that most of the disrupted capacity will be online by the end of the month, a target some observers have criticized as too ambitious.
“The current timetable is overly optimistic,” said Joe McMonigle, an analyst at Hedgeye Risk Management and former vice chairman of the International Energy Agency. The kingdom probably won’t achieve full capacity “until the end of the year at the earliest.”
Equity markets also slumped while U.S. government debt and gold rallied as investors fled risky assets such as crude and other commodities.
Oil has been under pressure for most of the past week on signs the Saudis were making progress in quickly restoring output. Adding to the bearish sentiment were remarks by incoming European Central Bank President Christine Lagarde indicating that trade tensions remain the top threat to growth. In the S&P 500 Index, two stocks fell for every one that rose.
Despite the bearish headwinds, Brent futures traded in London are headed for the biggest monthly gain since April while the U.S. benchmark is set for its largest monthly rise since June.
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West Texas Intermediate for November delivery dropped $1.82 to $56.82 a barrel at 4:59 p.m. on the New York Mercantile Exchange. The contract had settled at $57.29.
Brent crude for November slipped $2.31 to $62.46 on the ICE Futures Europe Exchange. The global benchmark crude traded at a $5.64 premium to WTI.
The API also reported an almost 2-million barrel increase in gasoline stockpiles and a decline in diesel inventories. The Energy Information Administration is scheduled to release its weekly tally on Wednesday.
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