LONDON—Oil prices were in the red on Wednesday on bearish U.S.
oil inventory data and continuing signs that the world has an
oversupply of petroleum that won't end soon.
August-dated Brent crude, the global oil price benchmark, fell
1.1% to $62.86 a barrel on London's ICE Futures exchange. On the
New York Mercantile Exchange, West Texas Intermediate for delivery
in August was trading down 1.5% at $58.59 a barrel.
Late Tuesday, the American Petroleum Institute, an industry
group, reported a surprise 1.9-million-barrel build in weekly U.S.
oil stockpiles.
The U.S. Energy Information Administration will release its
official inventory data later on Wednesday and analysts polled by
The Wall Street Journal expect a 1.2 million-barrel drop.
"The build in crude surprised the markets which will now closely
watch EIA's report," said Michael Poulsen, oil analyst at Global
Risk Management. "Expect some volatility ahead of the
publishing."
EIA's report will also be scrutinized for its weekly U.S. oil
production estimate. On Tuesday the agency said that U.S. oil
output in April rose to 9.7 million barrels a day, the highest
level since 1971.
As investors parse the data for signs how the U.S. shale
industry will respond to lower oil prices, members of the
Organization of the Petroleum Exporting Countries are ramping up
their oil output.
According to JBC Energy, OPEC production has increased by
170,000 barrels a day in June to 31.2 million barrels a day, the
highest level since September 2012.
"With these strong growth rates, OPEC supply growth is now
challenging non-OPEC supply growth," JBC said.
Meanwhile, Iran and the West extended talks over Tehran's
nuclear program for a week past Tuesday's deadline to reach a deal
that can eventually unlock millions of barrels of Iranian
crude.
U.S. President Barack Obama said he is prepared to walk away
from a nuclear deal unless Iran accepts a tight monitoring
regime.
The market is also keeping an eye on the Greek debt crisis,
which continues to roil financial markets. On Tuesday, the country
became the first developed nation to default on its payment to the
International Monetary Fund.
Nymex reformulated gasoline blendstock for August—the benchmark
gasoline contract—fell 1.1% to $2.0267 a gallon, while ICE gasoil
for July changed hands at $573.50 a metric ton, down $0.25 from
Tuesday's settlement.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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