Crude futures faced selling pressure in Asia on Wednesday, after industry group American Petroleum Institute said U.S. crude stockpiles ticked higher last week, contrary to general market expectations.
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Many analysts say the crude stockpiles should show a decline for last week because heavy downpours in the Gulf of Mexico likely stunted oil operations there for several days. However, the API data showed crude inventories increasing 800,000 barrels.
A WSJ survey of 10 analysts and traders tipped for a decline of 2.4 million barrel in crude inventories. Meanwhile, a report on crude inventories from the Energy Information Administration is due later Wednesday.
"The storm made landfall on June 22 and the [API] inventory snapshot was as of June 23, so there may be an element of reporting lag that could push the impact of the storm into next week's report," said Tim Evans, a Citi Futures analyst.
Oil prices rose around 2% overnight after reports of massive cyberattacks on global businesses impacting shipping giant A.P. Moeller-Maersk A/S and Russia oil producer PAO Rosneft. But the gains quickly fizzled out.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $44.11 a barrel at 0236 GMT, down $0.13 in the Globex electronic session. August Brent crude on London's ICE Futures exchange fell $0.03 to $46.62 a barrel. Both benchmarks are down nearly 18% since the start of the year.
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Production data and exploration plans are closely scrutinized, as the market remains well-bloated and prices under heavy pressure. In the U.S., energy secretary Rick Perry this week touted an acceleration of U.S. oil output and exports as part of the Trump administration's agenda to make U.S. energy independent.
He said permits to explore and drill "withered on the vine" under the previous administration, noting that "those days are over."
His comments were taken negatively by some market participants, who say that rapidly increasing U.S. production at a time of stubborn oversupply will end up hurting shale producers.
"There is a danger to this kind of talk since many U.S. producers lose money if oil dips below $40," said Michael McCarthy, an analyst at CMC Markets.
If U.S. speeds up output, it could encourage oil producers like those in the Organization of the Petroleum Exporting Countries and Russia to turn their spigots wider, some argue.
As a way to tackle the three-year long glut, OPEC and Russia agreed on a 15-month production cut that started in January. So far, the effects of the cuts have been largely offset by output from the U.S.
Refined products were broadly down. Nymex reformulated gasoline blendstock was down 0.6% at $1.45 a gallon, while July diesel slipped 0.3% at $1.41. July ICE gasoil down 0.1% to $422.75 a metric ton.
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(END) Dow Jones Newswires
June 27, 2017 23:55 ET (03:55 GMT)