Oil prices mixed after inventory-fueled spike

Gulf of Mexico production was down 99,000 bpd in April and down another 75,000 bpd in May

An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China July 4, 2018.

USA crude stocks rose last week as imports jumped, while gasoline stocks decreased and distillate inventories rose, the Energy Information Administration said on Wednesday.

According to the Weekly Petroleum Status Report, U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve (SPR), increased by 3.8 million barrels last week.

"There's an expectation that the build from this week will be gone next week", said Phil Flynn, an analyst at Price Futures Group in Chicago. He also noted US monthly production figures fell in May. On Tuesday, crude oil futures for September ended down $1.37 or nearly 2%, at $68.76 a barrel.

Petrol stocks declined 2.5 million barrels, while crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures fell by 1.3 million barrels, EIA data showed.

Before the Genscape report sparked a rally, futures fell early on concerns about oversupply.

The cartel and its allies - known as OPEC+ - decided in June to increase production in response to consumers' concerns over rising prices and supply disruptions, so traders and investors have been watching Russia's oil data closely.

The Organization of the Petroleum Exporting Countries and partners including Russian Federation had cut output to rebalance supply and demand.

China has said it plans to impose tariffs on liquefied natural gas, raising concerns that it could also impose tariffs on oil, said John Kilduff, partner at Again Capital Management in NY.

"Chinese demand from the independent refiners is also lower while the escalating trade war also doesn't help sentiment". "A lot of this is the risk premium priced in for Iran and when do we start seeing an impact on supply there", Patterson said.

James Knightly, the chief worldwide economist at ING, said the latest payroll figures paint something of a mixed picture, though the US economy remains strong.

The kingdom has been under acute pressure from President Donald Trump to open the taps as he chokes off exports from Saudi's political rival, Iran.

"A clear definition around the macros is what the market is looking for and until we get that, it is likely to be volatile in the range", said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney.

Oil prices are also feeling the effects of tensions over global trade, which could cause economic growth to slow. China has said it will retaliate.

The U.S. nonfarm payrolls rose in July but the U.S. trade deficit recorded its biggest increase in more than 1-1/2 years in June as the boost to exports from soybean shipments faded and higher oil prices lifted the import bill.

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