Oil prices fall as US crude stocks jump

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The country was responsible for almost three-quarters of the 900,000 barrel year-on-year increase in global oil demand in the third quarter of this year, which was the biggest annual rise in a year.

While Chinese officials expect President Donald Trump to delay a threatened tariff increase, the USA has so far not sent a clear signal on its willingness to delay penalties comprising some $160 billion of imports from China.

Oil prices dropped nearly 1% on Wednesday following a surprise build in USA crude inventories, and as investors waited to see if a fresh round of tariffs by Washington on Chinese goods would come into force on Sunday.

Brent rose 45 cents, or 0.7%, to $64.17 a barrel by 1241 GMT.

Last week, Opec+, which includes most Opec producers along with 10 non-Opec producers led by Russian Federation, agreed to increase output cuts from 1.2 million barrels per day (Mmbpd), to 1.7 Mmbpd to support prices. West Texas Intermediate crude CLc1 slipped 36 cents to 58.88 dollars. Demand from the developed countries of the OECD is expected to decline by 75,000 barrels a day this year.

OPEC on Wednesday pointed to a small deficit in the oil market next year due to restraint by Saudi Arabia even before the latest supply pact with other producers takes effect, suggesting a tighter market than previously thought.

Iran, once the third-largest producer before the USA sanctions kicked in, saw its production drop by another 45,000 bpd to average just 2.102 million bpd.

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However, the limit of 15 Des for the next round of USA tariffs on Chinese imports weighed on the market.

Oil prices showed some movement on Wednesday, after the Energy Information Administration (EIA) surprised the markets with a surplus.

Prices have this month already been boosted by the US Federal Reserve's decision not to change interest rates.

The two big stories about oil markets over the past month have been the initial public offering of Saudi Aramco and the deeper production cuts agreed to by the oil-producing countries that comprise OPEC+.

"Even if they adhere strictly to the cut, there is still likely to be a strong build in inventories during the first half of next year", said the Paris-based organisation, which advises oil consuming nations.

Inventories of petroleum products also increased with gasoline stocks surging by more than 5 million barrels and distillates gaining a bit over 4 million barrels - with both more than double expectations.

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