The oil markets extended losses after USA government data showed that U.S. crude stockpiles rose unexpectedly last week, increasing 2.4 million barrels, compared with analysts' expectations for a decrease of 2.8 million barrels.
But as Washington and Beijing hit one another with increasingly punishing trade tariffs, putting a dampener on economic growth in the world's two biggest oil consumers, the market's hopes for a recovery are dimming.
USA crude oil production will reach record level in 2019 and 2020, according to the EIA on Tuesday.
Oil prices rose after Euroilstock data showed total crude and product inventories of 16 European nations in July were slightly lower than in June.
"We believe the oil market is starting to price in the fear of a severe and multi-year breakdown in U.S".
A USA recession would decrease global demand.
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Oil was trading down again on Wednesday as the China-US trade war escalations hinted at a slowing economy, which would dent oil demand.
On August 9, the International Energy Agency (IEA) cut its global oil demand growth forecasts for this year, citing fears of an economic downturn.
"Saudi Arabia is committed to do whatever it takes to keep the market balanced next year", the official said. That makes USA crude less attractive to foreign buyers, US crude sellers and traders said.
CNBC reported that Saudi Arabia plans to maintain its crude oil exports below 7 million barrels per day in August and September to bring the market back to balance and help absorb global oil inventories, a Saudi oil official said on August 7.
Despite the daily advance, it's hard to ignore crude's plummet this week due to growing fears that the trade spat between the US and China will expand into a currency war. Prearranged gatherings in Abu Dhabi subsequent early month can be essential for leaders of the OPEC+ group - especially the Saudi and Russian energy ministers - to signal their purposes on production, mentioned Helima Croft, the chief commodities strategist at RBC Capital Markets. This could trigger another steep break in prices.
"The tentative oil rebound could be short-lived as the US-China trade dispute is providing no real reasons to be optimistic", said Edward Moya, senior market analyst at Oanda in NY. "The sharp move we've seen in the last couple of days has probably made it more acute that this is not working", said Edward Bell, director of commodity research at Dubai-based bank Emirates NBD PJSC. This could be enough to put a lid on gains.