Investing.com - West Texas Intermediate oil pared losses in North American trade on Wednesday, after data showed that while oil supplies in the U.S. registered a surprise inventory build, it was smaller than the increase seen in data from the American Petroleum Institute a day earlier. In other bullish signals, supplies decreased at the U.S. key delivery point, suggesting higher demand, and gasoline stockpiles fell almost twice as much as expected.
Crude oil for September delivery on the New York Mercantile Exchange lost $1.06, or 1.54%, to trade at $67.70 a barrel by 10:33 AM ET (15:33 GMT) compared to $67.55 ahead of the report.
The U.S. Energy Information Administration said in its weekly report that crude oil inventories rose by 3.803 million barrels in the week ended July 27. Market analysts' had expected a crude-stock draw of 2.794 million barrels, although the American Petroleum Institute late Tuesday reported a supply increase of 5.590 million barrels.
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by 1.338 million barrels last week, the EIA said. Total U.S. crude oil inventories stood at 408.7 million barrels as of last week, according to press release, which the EIA indicated was “about 3% above the five year average for this time of year”.
The report also showed that gasoline inventories decreased by 2.536 million barrels, compared to expectations for a decline of 1.288 million barrels, while distillate stockpiles rose 2.983 million barrels, compared to forecasts for a gain of 0.264 million.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for October delivery traded down $1.33, or 1.79%, to $72.88 by 10:38 AM ET (15:38 GMT), compared to $72.87 before the release.
Meanwhile, Brent's premium to the WTI crude contract stood at $5.02 a barrel by 10:39 AM ET (15:39 GMT), compared to a gap of $5.45 by close of trade on Tuesday.
Wednesday’s losses extended a monthly decline of around 7% in July as investors worry over escalating supply.
Reports on Tuesday that U.S. President Trump offered to meet with Iranian counterpart Hassan Rouhani at "any time," raised questions about whether the U.S. was softening its position on Iran. That scaled back investor expectations for a massive loss of Iranian crude from the market.
Earlier this week, a Reuters survey showed that OPEC hiked production by 70,000 barrels per day to 32.64 million bpd, a 2018 high. Further supply increases could offset production outages and pressure prices, it added.
On June 22-23, OPEC, Russia and other non-members agreed to return to 100% compliance with oil output cuts that began in January 2017, after months of underproduction elsewhere had pushed adherence above 160%.
Even though output continued to decline in Iran, Libya and Venezuela, the survey suggested that compliance had only fallen to 111% in July, suggesting more room for increasing production from the likes of Saudi Arabia or OPEC’s non-member ally Russia.
In another worrying sign for bulls, the U.S. rig count, an early indicator of future output, rose by 3 to 861 last week, according to oilfield services firm Baker Hughes.