Oil dips as rising storage offers no relief amid market panic

Bloomberg

Oil tumbled the most in a week as global financial markets swooned and swelling US crude stockpiles reinforced fears about an economic slowdown.
Futures slipped more than 5% in New York, joining a slide in equities. American crude inventories registered a surprise increase for the second straight week, US data showed on Wednesday, although gasoline demand was also healthy. Investors were already fleeing commodities and other higher-risk assets as sagging Treasury yields sounded alarm bells for a recession.
“People are panicking,” said Mark Waggoner, president of Oregon brokerage Excel Futures Inc. “They are saying ‘I can’t be long crude here if the economy is going to slow down.’”
West Texas Intermediate crude for September delivery fell $2.73 to $54.37 a barrel on New York Mercantile Exchange. The contract slipped below its 50- and 200-day moving averages, often a bearish harbinger for investors, and more than wiped out a gain Tuesday that was fueled by optimism over US-China trade talks.
Fears of a recession spread after the gap in rates for two- and 10-year US Treasuries inverted, triggering a more-than 2% fall for the S&P 500 stock index. A contraction in Germany’s economy and weak retail and industrial activity in China added to hints of a slowdown that could stall oil demand.
In the US, crude stockpiles grew by 1.58 million barrels, the US Energy Information Administration said. It was the second straight week that oil inventories grew even as analysts had expected a decline. Still, exports rebounded, gasoline stocks shrank by 1.41 million barrels and gasoline demand climbed to its highest in almost 30 years of record-keeping.
While the data can be volatile, “in general, a crude build on a day when there’s growing concern about a recession is not going to do anything good for oil prices,” said Rob Thummel, managing director at Tortoise, a Kansas firm that oversees more than $16 billion in energy assets.

The report puts more pressure on Opec leader Saudi Arabia, which has pledged to cut exports to help stem the price rout, he said.
“I think Opec knows they need to get their imports to the United States down,” he said. “If we continue to have higher imports, that will be a challenge for oil markets.”