Oil slips as industry data signals gain in US crude stockpiles

Seoul - Oil slipped after the industry-funded American Petroleum Institute was said to report an increase in US crude stockpiles.

Futures in New York lost 0.3%, paring Tuesday’s 0.8 %gain. The API reported US inventories increased by 1.63 million barrels last week, according to people familiar with the data. That contrasts with a Bloomberg survey before Energy Information Administration data to be released on Wednesday that forecasts a 3.5 million-barrel decline, which would be the 13th drop in 15 weeks.

Oil has lingered below$50 a barrel despite an agreement by the Organisation of Petroleum Exporting Countries (Opec) and its allies to curb output amid stubbornly high global supplies.

Concern is growing that the deal may fray after Opec-member Ecuador’s admission this week that it won’t be able to meet its cut commitments.

"The market is expecting to see stockpiles shrinking as we’ve entered the driving season," Kim Kwangrae, a commodities analyst at Samsung Futures, said by phone in Seoul.

"It’s alarming Ecuador has said publicly it will exit the output-cut deal because it can set a precedent for other member nations, which may put the entire agreement in danger."

Brimming supply

West Texas Intermediate for August delivery, which expires Thursday, was at $46.28 a barrel on the New York Mercantile Exchange, down 12 cents, at 2:12pm in Seoul. Total volume traded was about 15 %below the 100-day average.

Prices advanced 38 cents to settle at $46.40 on Tuesday. The more-active September contract lost 13 cents to $46.46.

Brent for September settlement slipped 12 cents to $48.72 a barrel on the London-based ICE Futures Europe exchange. Prices gained 42 cents to end Tuesday’s session at $48.84. The global benchmark crude traded at a premium of $2.25 to WTI.

Ecuador Oil Minister Carlos Perez said late on Monday the nation will start raising oil production this month, arguing it needs the money. On Tuesday, after speaking with Saudi Arabia’s energy minister, Perez issued a statement saying his country and the Saudis remain committed to reducing inventories to a "normal" level as part of Opec’s strategy to boost crude prices.

Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, climbed by 608 000 barrels last week, the API was said to report. They probably declined by 1.5 million barrels, according to a forecast compiled by Bloomberg before the EIA data. Meanwhile US gasoline inventories fell by 5.45 million barrels and distillates by 2.89 million last week, the API was said to report.

Oil-market news:

Saudi Arabia’s crude shipments fell to 6.924 million barrels a day in May from 7.006 million barrels a day in April, according to JODI data. Iraq’s exports rose 1.7 %to 3.818 million barrels a day, the data showed.

Libya will participate in a technical meeting with fellow Opec members as well as Russia in St. Petersburg on July 22 to share the "factors enabling and constraining Libya’s production recovery," said Mustafa Sanalla, chairman of state-run National Oil.

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