Oil prices fell on Wednesday after industry data showed U.S. crude inventories rose last week when they had been expected to drop, even as a weaker dollar helped to limit deeper losses.
Crude futures have steadied this week after tumbling to three-months lows earlier in July on concerns that higher Iranian exports would add to an oversupplied market.
U.S. crude held above $50 a barrel on Wednesday after dipping below that mark this week for the first time since early April. By 0657 GMT (2.57 a.m. EDT), West Texas Intermediate (WTI) for September delivery CLc1 was trading 60 cents lower at $50.26 a barrel, after closing 42 cent higher in the previous session.
The WTI August contract CLQ5, which expired on Tuesday, settled at $50.36 a barrel on its last day of trade, after slipping as low as $49.77 during the session.
September Brent futures LCOc1 were trading 46 cents lower at $56.58 a barrel, after rising 39 cents on Tuesday.
Reuters technical analyst Wang Tao expected both benchmarks to rebound to $51.90 and $57.97, respectively.
Prices came under pressure after data from industry group American Petroleum Institute (API) showed U.S. crude stocks rose 2.3 million barrels in the week ended July 17. [API/S]
In a poll by Reuters, eight analysts had forecast U.S. commercial crude oil stocks fell 2.3 million barrels on average last week. [EIA/S]
“Any indication of rising oil inventories in this week’s EIA weekly report is likely to weaken oil prices further,” analysts at ANZ said in a note to clients.
The U.S. Energy Information Administration (EIA) report – more closely watched that the API figures – is due out at 1430 GMT (10.30 a.m. EDT) on Wednesday.
Besides pressure from the nuclear accord between Iran and world powers, oil prices had also been weighed down over the past week as the dollar .DXY rose to three-month highs on prospects for a U.S. interest rate hike later this year.
A stronger greenback makes oil more expensive for consumers holding other currencies, making them less likely to buy.
The U.S. dollar, though, retreated against a basket of currencies on Tuesday to create some support for oil and other dollar-denominated commodities.
A glut of diesel is set to worsen with industry sources saying Chinese exports of the fuel in August will reach their highest since at least 1999 as its local market cannot absorb high output from refineries.
The expected ramp-up comes as OPEC kingpin Saudi Arabia has already been stepping up exports of diesel.