Oil down more than $1 a barrel on US crude build, delay in US-China trade pact

• Oil prices dropped more than $1 a barrel on Wednesday after a much larger-than-expected build in US crude.
• Brent crude settled at $61.74 a barrel, losing $1.22 cents.
• There's nothing but bearishness in the EIA report.

NEW YORK: Oil prices dropped more than $1 a barrel on Wednesday after a much larger-than-expected build in US crude inventories and after Reuters reported that the signing of a US-China trade deal could be delayed until December.

Brent crude settled at $61.74 a barrel, losing $1.22 cents, or 1.94 percent. West Texas Intermediate crude settled at $56.35 a barrel, losing 88 cents, or 1.54%.

Prices extended losses after Reuters reported that a meeting between US President Donald Trump and Chinese President Xi Jinping to sign a long-awaited interim trade deal could be delayed until December as discussions continue.

Earlier, prices dropped after data from the Energy Information Administration (EIA) showed US crude inventories rose by 7.9 million barrels in latest week, exceeding analysts' expectations for a build of 1.5 million barrels.

"There's nothing but bearishness in the EIA report," said Bob Yawger, director of futures at Mizuho in New York.

"Exports are a big area for where the number came from. That's largely related to the sanctions on COSCO, which came home to roost," Yawger said, referring to reduced tanker availability due to US sanctions on Chinese shipping firm COSCO.

Gasoline stocks dropped by 2.8 million barrels, compared with a forecast of a 1.8 million-barrel drop, and distillates, which include diesel and heating oil, lost 622,000 barrels, versus expectations for a decline of 949,000s, the EIA said.

A drop in crude exports and an increase in imports last week worsened the build, said Phil Flynn, an analyst at Price Futures Group.

Adding to pressures, the International Monetary Fund said euro zone economic growth was set to slow more than expected as the bloc's manufacturing crisis could spill over to the larger services sector under global trade tensions.

Data showed Germany's services sector barely grew in October, while euro zone business activity expanded slightly faster than expected but remained close to stagnation.

Middle East tensions offered prices some support. Iran started to inject uranium gas into centrifuges at an underground nuclear facility, further distancing itself from Tehran's 2015 nuclear deal with world powers. The United States pulled out last year and has imposed tough new sanctions on Iran.

"Alongside the continued rolling back of its nuclear commitments, the OPEC nation may be tempted to cause further supply disruptions in the Middle East in a bid to drive up prices," PVM analyst Stephen Brennock said. "Accordingly, conditions are ripe for tensions in the region to escalate and for the geopolitical risk premium to strike back with a vengeance."

However, Russian Energy Minister Alexander Novak said the current oil price of more than $60 per barrel showed that markets were stable.