Crude futures edged down on Wednesday, as investors continued to be concerned over the oil market's failure to rebalance.
Brent crude, the global oil benchmark, fell 0.11% to $46.60 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.34% at $44.08 a barrel.
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Oil prices rose around 2% overnight after reports of cyberattacks on global businesses impacting shipping giant A.P. Moeller-Maersk A/S and Russian oil producer PAO Rosneft. But the gains quickly fizzled out.
The Organization of the Petroleum Exporting Countries and a handful of nations outside the cartel have cut global supply by about 2% with the aim of bringing down global stocks to below five-year average levels.
But despite efforts by the major oil producers, global stocks remain elevated and investors are growing concerned that the cuts have proven ineffective.
Some investors also expected U.S. crude stockpiles to decline last week because heavy rain in the Gulf of Mexico was likely to have limited oil operations there for several days.
However, estimates by the industry group American Petroleum Institute showed crude inventories increasing 800,000 barrels. A WSJ survey of 10 analysts and traders had bet on the figures revealing a stock draw of 2.4 million barrels.
"The market is somehow getting the fact that the rebalancing is not occurring," said Olivier Jakob from the Switzerland-based consultancy Petromatrix. "It's difficult to have a strong rebound when you continue to have builds in the U.S."
Investor concerns about rising production from OPEC members that are exempt from the supply cut deal and external producers including the U.S. have pushed oil in to bear market territory. Crude has lost 20.8% of its value over the past six months.
Despite falling prices, American producers have continued to ramp up output.
According to the oil-services firm Baker Hughes Inc. the U.S. oil rig count rose by 11 in the latest week's data, reaching a 26-month high of 758.
Additionally, 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 boost the domestic oil industry.
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.
Meanwhile, investors are watching for a report on crude inventories from the Energy Information Administration due later Wednesday.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 1.44% to $0.84 a gallon. ICE gasoil changed hands at $422.75 a metric ton, down $0.25 from the previous settlement.
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(END) Dow Jones Newswires
June 28, 2017 06:41 ET (10:41 GMT)