London: Oil prices fell on Wednesday after an industry report on Tuesday showed a sharp increase in petroleum inventories in top consumer the United States.
If the industry data is confirmed by another set of weekly figures from the US government due out later on Wednesday, it would send the combined crude and product inventories in the world’s top economy to a record high.
US crude oil futures fell 59 cents, or 0.78%, to $75.18 a barrel by 0849 GMT. On Tuesday, prices rose modestly, snapping the decline for the previous five trading days.
ICE Brent fell 51 cents to $76.42, after flipping into a premium to the US benchmark on Tuesday.
Late on Tuesday, industry group the American Petroleum Institute (API) said US crude inventories rose by almost 5.9 million barrels last week.
The data also showed a 2 million barrel rise in gasoline inventories, which marked an unseasonal seven consecutive weeks of increases. The auto fuel stocks typically fall during the summer holidays in the United States.
Middle distillate inventories, including diesel and heating oil, rose for the 11the consecutive week. “It looks like the oil product market is very comfortably supplied and that demand conditions remain lacklustre,” said Stefan Graber, a commodities analyst with Credit Suisse in Singapore.
New York RBOB gasoline was trading 1% lower, after hitting about a three month low earlier this week.
At 9:00pm, US government’s Energy Information Administration (EIA) will release its own oil data for the week to 13 August.
Analysts in a Reuters poll taken before the release of the API data expect the government figures to show a 1 million barrel drop in total crude oil inventories and a small fall in gasoline stocks.
JBC Energy in Vienna said the EIA data would be “scrutinised” for inventory levels at Cushing in Oklahoma, the delivery point of physical US crude.
High inventories at Cushing typically push North Sea benchmark Brent crude prices to a premium to US crude. Many investors put their money in the moves of the spread between these crude oil contracts.
The premium of Brent has been around a two-month high since Tuesday. In the week to Aug. 6, Crude supplies at Cushing stood at 37.7 million barrels in the week to 6 August, just shy of a record 37.9 million barrels in mid-May.
Oil Prices are now centred near the mid-point of the $64.24-$87.15 trading range so far this year as increases in energy demand in emerging markets has been insufficient to drain ample supplies in other areas in the world.
The price level is also around the sweet spot of the $70-$80 range for the Organization of the Petroleum Exporting Countries (Opec).