LONDON (Reuters) – Oil edged lower Wednesday unable to shake off the downbeat mood of the last two days in response to a sharp rise in U.S. stockpiles of products like gasoline, pointing to weak demand during the summer driving season in the United States.
FILE PHOTO: The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France March 28, 2019. REUTERS/Christian Hartmann
Brent crude LCOc1 futures were down 10 cents at $63.56 a barrel by 0840 GMT. They fell 1% on Wednesday, and 3% on Tuesday.
U.S West Texas Intermediate crude CLc1 futures were down 19 cents at $56.59. The U.S. benchmark dropped 1.5% in the previous session, and 3% on Tuesday.
Mixed signals from the United States and Iran also left market in limbo. U.S President Donald Trump said on Tuesday progress had been made with Iran but Tehran denied it was willing to negotiate over its missile program.
U.S. officials also said on Wednesday they were unsure whether an oil tanker towed into Iranian waters was seized, or rescued.
Data on Wednesday from the U.S. Energy Information Administration (EIA) showed a larger-than-expected drawdown in crude stockpiles last week, but traders focused instead on large builds in refined product inventories dragging prices down.
U.S. crude inventories USOILC=ECI fell 3.1 million barrels, the EIA said, more than analysts’ forecasts for a decrease of 2.7 million barrels.
But gasoline stocks USOILG=ECI rose 3.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 925,000-barrel drop. Distillate stockpiles USOILD=ECI grew by 5.7 million barrels, much more than expectations for a 613,000-barrel increase, the EIA data showed.
“Due to the combination of unattractive weekly statistics on U.S. oil inventories from the EIA and sluggish performances from the stock markets Tuesday’s sell-off did not turn out to be a buying opportunity, at least not for the time being,” PVM analyst Tamas Varga said.
For a graphic on U.S. crude inventories, weekly changes since 2017, see: tmsnrt.rs/2XlX17b
Crude production was disrupted last week by Storm Barry, which came ashore on Saturday in central Louisiana as a Category 1 hurricane, the first major storm to hit the U.S. Gulf of Mexico this season.
More than half of daily crude production in the Gulf of Mexico remained offline by Tuesday, as most oil companies were re-staffing facilities to resume production.
The “easing of tensions between the U.S. and Iran, mixed Chinese growth data and storm-hit operations getting back online are all pressuring oil prices downward,” Alfonso Esparza senior market analyst at OANDA, said.
Japan’s exports fell for a seventh straight month in June, with shipments to China falling more than 10%, while Japanese manufacturers’ business confidence fell to a three-year low.
Additional reporting by Aaron Sheldrick in Tokyo. Editing by Jane Merriman