|17 October, 2019

Oil falls but losses limited by new Brexit deal

Global benchmark Brent crude oil futures was down by 47 cents, or 0.8%, at $58.95 a barrel

An oil pump is seen at sunset outside Scheibenhard, near Strasbourg, France, October 6, 2017. Image used for illustrative purpose.

An oil pump is seen at sunset outside Scheibenhard, near Strasbourg, France, October 6, 2017. Image used for illustrative purpose.

REUTERS/Christian Hartmann

Oil prices fell on Thursday as industry data showed a larger-than-expected build-up in U.S. inventories but losses were limited after the United Kingdom and the European Union announced they had reached a deal on Brexit.

Global benchmark Brent crude was down 37 cents at $59.05 a barrel by 1330 GMT. U.S. WTI crude was also down 37 cents, at $52.99.

U.S. crude inventories soared by 10.5 million barrels to 432.5 million barrels in the week to Oct. 11, the American Petroleum Institute's weekly report showed, ahead of official government stocks data due on Thursday. 

Analysts had estimated U.S. crude inventories rose by around 2.8 million barrels last week. 

The U.S. Department of Energy is scheduled to publish the official inventory data on Thursday.

"The U.S. sanctions imposed on the Chinese shipping company COSCO are seriously denting demand for imported crude oil... This has a profound impact on U.S. crude oil inventories as reflected in last night’s API report," said Tamas Varga, an analyst at PVM Oil Associates.

"U.S. refinery maintenance is not helping to reverse the current trend and further builds in U.S. crude oil inventories can be expected in the next few weeks."

The United States imposed sanctions on COSCO Shipping Tanker (Dalian) Co and subsidiary COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co for allegedly carrying Iranian crude oil. 

Adding to concerns about the global economy - and therefore oil demand - data from the United States showed retail sales in September fell for the first time in seven months. Earlier data showed a moderation in job growth and services sector activity. 

Still, the new Brexit deal helped limit the fall in oil prices. Prime Minister Boris Johnson said that Britain and the EU had agreed a "great" new Brexit deal and urged lawmakers to approve it at the weekend.

European Commission President Jean-Claude Juncker also said Britain and the EU had agreed a deal. 

However, the Northern Irish party Johnson needs to help ratify any agreement has refused to support the deal. 

Hopes of a potential U.S.-China trade deal also supported crude prices. China's commerce ministry said on Thursday that China hoped to reach a phased agreement with Washington as early as possible, and make progress on cancelling tariffs on each others' goods. 

(Additional reporting by Jessica Jaganathan; editing by Jason Neely) ((bozorgmehr.sharafedin@thomsonreuters.com;))

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