WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Intercontinental Exchange Brent crude extended lower in overnight trade, shrugging off industry data showing another weekly draw in United States commercial crude inventories as global trade tensions continue to weigh on the outlook for global economic growth and oil demand.
Near 9 a.m. ET, September NYMEX West Texas Intermediate crude futures slid $1.24 to $52.40 per barrel (bbl) and ICE October Brent crude shed $1.02 to $57.91 gallon.
September NYMEX RBOB futures fell 1.77 cents to $1.6696 gallon while the September ULSD contract dropped 2.64 cents to $1.7976 gallon.
The American Petroleum Institute reported a 3.43 million bbl drop in U.S. commercial crude inventories during the week ended Aug. 2, slightly below market calls for a 3.8 million bbl drawdown. Some analysts anticipated a larger draw last week following draws of more than 5 million bbl in the past four weeks.
Trade sources said API reported gasoline stocks dropped 1.1 million bbl, slightly lower than the expected decline of 1.4 million, while distillate inventories rose 1.2 million bbl versus calls for decrease of 450,000 bbl. Market participants now await official figures from the U.S. Energy Information Administration, set for release this morning at 10:30 a.m. ET.
Oil futures Wednesday morning struggle to recover from recent losses, despite a strong rebound in equities and the drawdowns in U.S. crude oil inventories over the past weeks. The Chinese Central Bank finally signaled currency stabilization to calm the global equities, but the damage to investors' confidence has already been done and global oil benchmark plunged into the bear market by the end of the Tuesday's trading session. Trade analysts believe that the Chinese government sent a clear message to the markets that Beijing would not shy away from using its national currency to soften the worst effects of a trade war. Markets increasingly view the latest currency depreciation by Beijing as more worrisome than targeted tariffs against U.S. exports, which have broader implication for the global trade and economic growth.
EIA forecasts further weakness in global fuel demand in both 2019 and 2020, with the market seen oversupplied through 2020, according to its August Short-Term Energy Outlook.
EIA sees global oil production outpacing demand by 110,000 barrels per day (bpd) in the current year, while widening the gap by sizable 280,000 bpd in 2020. The government agency said it expects continued builds in global oil inventories, up 0.1 million bpd in 2019 and 0.3 million bpd higher in 2020.
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