“Inventory data out last night showed another weekly build in crude inventories despite markets expecting a draw,” he said.
Data from the American Petroleum Institute showed on Tuesday that U.S. crude stocks rose by 2.8 million barrels in the week to June 9 to 511.4 million, compared with expectations for a decrease of 2.7 million barrels.
With supplies plentiful, strong demand is needed to drive the market, but there are signs of a slowdown.
Global energy demand grew by 1 percent in 2016, a rate similar to the previous two years but well below the 10-year average of 1.8 percent, BP said in its benchmark Statistical Review of World Energy on Tuesday.
More specifically for oil, there are signs of a slowdown in China, long the key driver in fuel demand growth, as its economy slows down and refiners have produced far too much fuel for the market to consume, forcing a slowdown in activity.
“Chinese demand is slow… so we have a build-up of crude in Asia where demand seems to have slowed for now,” said Oystein Berentsen, managing director for oil trading company Strong Petroleum.