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Dec. 11, 2019, 2:56 p.m. EST

Oil prices end lower after unexpected climb in weekly U.S. crude inventory data

EIA report showed an 800,000-barrel weekly rise in crude stockpiles

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By Myra P. Saefong and Mark DeCambre, MarketWatch

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Oil falls as Saudis kick off Aramco IPO

Oil futures finished lower on Wednesday after U.S. government data showed an unexpected climb in domestic supplies of crude oil, as well as sizable gains in gasoline and distillate stockpiles.

Prices showed little reaction to the Federal Reserve’s decision to hold its benchmark interest rate unchanged in a range of 1.5% and 1.75%.

Still, the central bank did offer a more upbeat view on the economy, which can boost prospects for oil demand. In a statement, central bank said “the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the FOMC’s symmetric 2% objective.”

On Wednesday, West Texas Intermediate crude for January delivery declined 48 cents, or 0.8%, to settle at $58.76 a barrel on the New York Mercantile Exchange. On Tuesday, it settled at $59.24, its highest front-month contract settlement since Sept. 17, according to Dow Jones market Data.

February Brent crude  lost 62 cents, or 1%, to end at $63.72 a barrel on ICE Futures Europe.

The EIA on Wednesday reported that U.S. crude supplies edged up by 800,000 barrels for the week ended Dec. 6. Analysts polled by S&P Global Platts forecast a decrease of 2.8 million barrels, though the API reported Tuesday that U.S. crude supplies rose by 1.4 million barrels last week.

The inventory build reported by the Energy Information Administration Wednesday was not quite as large as what the American Petroleum Institute, a trade group, reported Tuesday, but unexpected, nonetheless, said Tariq Zahir, managing member at Tyche Capital Advisors.

“All eyes will now turn to some global macro events that will occur in the upcoming days,” he told MarketWatch.

“The 500-[pound] gorilla is whether a deal can be reached with China,” he said. “If we do not see a deal reached or minimally a delay in imposing new tariffs, we could see a substantial risk off posture being taken in all asset classes across the board.”

The EIA data also showed supply increases of 5.4 million barrels for gasoline and 4.1 million barrels for distillates. The S&P Global Platts survey had shown expectations for a supply climbs of 3.3 million barrels for gasoline and 2 million barrels for distillates.

On Nymex, January gasoline  fell 1.6% to $1.6261 a gallon and January heating oil  shed 1.9% to $1.9288 a gallon.

January natural gas  shed 0.9% to $2.243 per million British thermal units, ahead of the EIA’s weekly update on supplies of the fuel, due out Thursday.

Since the conclusion of a meeting of the Organization of the Petroleum Exporting Countries and its allies last week in Vienna, where the cartel reached an agreement to cut an additional 500,000 barrels of oil a day, prices of crude have bounced around, with attention shifting to global demand and the degree by which the China-U.S. trade conflict could hurt global economies and hence appetite for the commodity.

Concerns that the trade war will slow demand for oil have lingered. In a monthly report issued Wednesday , however, OPEC left its expectations for world oil demand growth unchanged from its previous report, at 0.98 million barrels a day for 2019 and at 1.08 million barrels a day for 2020. The report also forecast non-OPEC oil supply growth at 1.82 million barrels per day, also unchanged from last month’s report.

Also see: Extreme weather seen impacting oil prices in 2020 as well as geopolitics

Meanwhile, White House advisers Larry Kudlow and Peter Navarro have both indicated that tariffs scheduled to hit Chinese goods on Dec. 15 are “still on the table,” following a report from the Wall Street Journal that said both parties were bracing for a delay of a tariff increases on China goods on Sunday, which would be read as an escalation of tensions.

“Imposing the new tariffs...in our opinion would lead to a risk off across everywhere,” said Zahir.

Wednesday’s oil action also comes as Saudi Arabia’s oil company Aramco surged in its debut on the Saudi Tadawul stock exchange , reaching a 10% daily limit in early action, making the $25.6 billion initial public offering the biggest in history and creating the biggest company in the world at $1.88 trillion valuation.

Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong. Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.

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