Investing.com – WTI crude oil prices settled 1.2% lower on data showing a surprise build in U.S. crude supplies and an ongoing expansion in U.S. output to a record.
On the New York Mercantile Exchange crude futures for July delivery fell 1.21% to settle at $64.73 a barrel, while on London's Intercontinental Exchange, Brent fell 0.01% to trade at $75.36 a barrel.
Inventories of U.S. crude rose by 2.072 million barrels for the week ended June 1, confounding expectations for a draw of 2.000 million barrels, according to data from the Energy Information Administration (EIA).
The unexpected rise in crude supplies emerged as exports fell - despite the widening spread between WTI crude and Brent oil prices – and imports rose sharply.
Crude imports rose 715,000 barrels per day (bpd) last week to 8.3 million barrels per day (bpd), while exports fell 500,000 bpd to 1.7 million bpd. A 1.5% uptick in refinery activity, however, limited the size of the build in crude inventories yet product supplies rose sharply.
Gasoline inventories – one of the products that crude is refined into – rose by 4.603 million barrels, missing expectations for an increase of just 0.587 million barrels, while supplies of distillate – the class of fuels that includes diesel and heating oil – rose by 2.165 million barrels, missing expectations for a build of 0.784 million barrels.
The sharp builds in product stockpiles come as total petroleum product supplied sank to 18.5 million barrels a day, the lowest since Dec. 2016, according to Bloomberg.
U.S. oil output, meanwhile, continued its expansion rising to a record 10.8 million bpd, according to preliminary EIA data.
Sentiment on oil prices has sourced in recent weeks on expectations OPEC and its allies would ease production cuts to curb falling supplies from Venezuela and Iran, slowing the pace of rebalancing in oil markets.
Those fears were exacerbated Tuesday following a report the U.S. government had asked Saudi Arabia and other OPEC members to increase oil output by around 1 million barrels a day.
The production-cut agreement and falling Venezuelan output – weighed down by U.S. tariffs – have helped slashed the global glut in crude stockpiles to just above the five-year average, OPEC said in its most recent monthly report.
In November 2016, OPEC and other producers, including Russia agreed to cut output by 1.8 million barrels per day (bpd) to slash global inventories to the five year-average. The OPEC-led deal was renewed last year through 2018 and is expected to come under review at the oil-cartel's next meeting on June 22.