LONDON (Reuters) – Oil prices came under pressure on Thursday from rising U.S. crude oil stocks and weak factory activity in China, with few bullish factors on the horizon.
FILE PHOTO: A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma September 15, 2015. REUTERS/Nick Oxford
Brent crude futures were down 20 cents at $60.41 a barrel by 1156 GMT, erasing earlier gains. They had dropped by 1.6% on Wednesday and the contract is set for a monthly decline of about 0.6%.
U.S. West Texas Intermediate (WTI) crude futures were down 73 cents at $54.33. On the month, however, they are set for a rise of about 0.5%, its biggest monthly gain since June.
Factory activity in China shrank for a sixth straight month in October while growth in the country’s service sector activity was its slowest since February 2016, official data showed on Thursday.
A protracted trade war between China and the United States has been weighing on the demand outlook for oil.
Leaders from the United States and China encountered a new obstacle in their struggle to end the damaging trade conflict when the summit at which they were supposed to meet was canceled on Wednesday because of violent protests in host nation Chile.
A Reuters survey showed on Thursday that oil prices are likely to remain pressured this year and next.
The poll of 51 economists and analysts forecast Brent crude would average $64.16 a barrel in 2019 and $62.38 next year.
Releasing third-quarter results, Royal Dutch Shell warned that uncertain economic conditions could slow its $25 billion share buyback program, the world’s largest, and had led to a downward revision to its oil price outlook.
The U.S. Federal Reserve cut interest rates for a third time this year on Wednesday, looking to bolster economic growth with a move that could also boost demand for crude.
Yet gains are likely to be capped until inventories start to show sustained declines.
U.S. crude inventories rose by 5.7 million barrels in the week to Oct. 25, the U.S. Energy Information Administration said on Wednesday, compared with analyst expectations for an increase of 494,000 barrels.
Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose for a fourth straight week, gaining 1.6 million barrels last week, the EIA said.
“The U.S. stock report was anything but encouraging,” PVM analysts said in a note.
The American Petroleum Institute had previously reported a decline of 708,000 barrels, raising hopes that official figures would also show a fall.
Cushioning the bearish crude data, the EIA showed gasoline and distillate inventories continued to draw.
GRAPHIC: U.S. petroleum inventories, here
Additional reporting by Reporting by Aaron Sheldrick in TOKYO; Editing by David Goodman