Oil Prices Under Pressure as Supplies Drop

OilDow Jones Newswires

Oil held above $64 a barrel on Wednesday as a U.S. government report showing crude inventories fell for an eighth week, in a sign a supply glut is easing, countered concerns about Greece's debt crisis.

U.S. crude stocks fell by 4.9 million barrels, the U.S. Energy Information Administration (EIA) said, more than analysts expected. This confirmed a trend reported by the industry group American Petroleum Institute on Tuesday.

Continue Reading Below

"Initially there was some sell-the-fact reaction to the drop in crude inventories and also some expectation that the inventory drop was related to a temporary drop in crude oil imports associated with Tropical Storm Bill," said Phil Flynn, senior analyst at Price Futures Group in Chicago.

"The crude market also is being hampered by the situation with Greece and any resolution to that problem might be a boost to the oil market."

Brent crude <LCOc1> had declined 1 cent to $64.44 a barrel by 11 a.m. EDT. U.S. crude <CLc1> gained 16 cents to $61.17. Both contracts made gains on Tuesday.

OPEC Crude Oil Basket Reference Price - 1 Year | FindTheData!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^https:/.test(d.location)?'https':'http';if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+"://cdn1.findthebest.com/rx/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","ftb-widgetjs");

The EIA report released at 10.30 a.m. EDT also reported an unexpected rise in stocks of gasoline, which a trader said would likely weigh on crude prices.

The Greek debt crisis is on the market's radar. European equities traded lower on Wednesday as doubts returned over the issue and the dollar gained, recovering from an earlier loss against a basket of currencies.

A stronger dollar makes commodities priced in dollars more expensive for holders of other currencies.

Crude drew support from potential roadblocks for a nuclear accord between Iran and six world powers that would open the prospect of Iran boosting crude oil exports, as a self-imposed June 30 deadline approaches.

Iran's supreme leader on Tuesday ruled out freezing sensitive nuclear work for a long time, and Iran's parliament passed a bill banning access for U.N. inspectors to its military sites and scientists.

Oil Minister Bijan Zanganeh has said Iran could raise oil output by 500,000 barrels per day within a month of a lifting of sanctions, although analysts and other OPEC delegates doubt a recovery would be that rapid.

(Additional reporting by Keith Wallis and Robert Gibbons; Editing by Dale Hudson)