Crude fell after an industry report showed an unexpected rise in US crude stockpiles.
Futures in New York edged lower after the American Petroleum Institute was said to report US crude inventories increased 5.59 million barrels last week. That compares to a three million-barrel decline in stockpiles seen by analysts in a Bloomberg survey.
The size of the build is “surprising to me,” said James Williams, president of London, Arkansas-based energy researcher WTRG Economics. But, “a lot of it is timing of when ships arrive,” so it seems a larger crude import number is likely, he said.
The US benchmark lost 7.3 per cent in July, posting the biggest monthly loss since July 2016, as some of the largest producers, such as Saudi Arabia, are seen raising supply levels. The drop was exacerbated Tuesday amid low-volume trading and a strengthening dollar.
The US benchmark crude declined in July as trade tensions between the US and China weighed heavily on the market and as production from Saudi Arabia and Russia surged. Output in the US remained at record levels. Consultants JBC Energy estimated that Saudi Arabia raised production by 310,000 barrels a day to 10.8 million a day in July.
“It’s some of these concerns about oversupply with OPEC. There are also starting to be concerns about the slowdown or the plateauing in demand," said Ashley Petersen, lead oil analyst at Stratas Advisors in New York. Still, the low volume is indicative of “the summer doldrums. The prices are down, but the activity actually hasn’t been that high.”
West Texas Intermediate crude for September delivery traded at $68.33 a barrel at 4:39 p.m. after settling at $68.76 a barrel on the New York Mercantile Exchange. Total volume traded was about 35 per cent below the 100-day average.
Brent for September settlement, which expires Tuesday, slid 72 cents to end the session at $74.25 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $5.49 premium to September WTI. The more active Brent October contract lost $1.34 to close at $74.21.
The Bloomberg Dollar Spot Index rose as much as 0.2 per cent.
Meanwhile, US President Donald Trump said he would be willing to meet Iranian President Hassan Rouhani with “no preconditions” following Trump’s decision to withdraw from a 2015 nuclear deal.
“I would certainly meet with Iran if they wanted to meet,” Trump said Monday during a joint press conference at the White House with Italian Prime Minister Giuseppe Conte. “I don’t know if they’re ready. They’re having a hard time.”
Yet, the White House said the US will end sanctions on Iran only if the Islamic Republic changes its behaviour.
In the US, stockpiles at the Cushing storage hub in Oklahoma decreased 500,000 barrels last week, according to a forecast compiled by Bloomberg.
The API report was also said to show distillate inventories rose 2.89 million barrels, gasoline supplies shrank by 791,000 barrels, while Cushing inventories dropped for an eleventh straight week if Energy Information Administration data confirms it on Wednesday.