Investing.com - WTI crude oil prices settled lower Tuesday as gains on the back of the U.S.-Mexico trade deal waned and focus shifted to fresh supply data expected to show a slower pace of crude inventory drawdowns.
On the New York Mercantile Exchange crude futures for October delivery lost 34 cents to settle at $68.53 a barrel, while on London's Intercontinental Exchange, Brent fell 0.29% to trade at $76.31 a barrel.
Crude oil prices reversed their gains from a day earlier, which had followed confirmation of a U.S.-Mexico trade deal, in which energy trade is reportedly a key component of the pact.
"The trade deal with Mexico is definitely a supportive issue," said Phil Flynn, analyst at Price Futures Group in Chicago, following confirmation of deal on Monday. "Opening those trade barriers up increases growth and increases demand expectations for oil."
Heading into settlement, investor focus shifted to fresh U.S. crude supply data expected to show a slower pace of drawdowns in stockpiles.
U.S. petroleum inventory data from the American Petroleum Institute, an industry group, is due later in the session at 4:30 p.m., while official data from EIA is set to be released Wednesday at 10:30 a.m.
The EIA is expected to report U.S. crude stockpiles fell just 0.686 million barrels last week, which pales in comparison to the 5.836 million barrel decline in the prior week.
Oil prices were also weighed on by rising output from major oil producers as members of an OPEC and non-OPEC monitoring committee revealed Monday that producers, part of the production-cut agreement, increased output in July.
Opec and non-OPEC members achieved a 109% compliance rate with the production-cut agreement, below the 120% rate seen June, when OPEC and non-OPEC members agreed to return to 100% compliance with oil output cuts that began in January 2017.
The pledge to return to agreed production limits was brought on by fears that U.S. sanctions against Iran's oil exports would pressure already low global spare capacity, although analysts have called into question expectations for steep losses of Iranian crude from the market.
Despite the potential of lower supply from Iran in coming months as U.S. sanctions on oil exports go into effect in November, the global market isn't likely to see pressure, as other OPEC members would raise output, Pimco said.
"It's estimated that upwards of 1 million barrels of daily output won't be available on the market. But other OPEC members are liable to increase their output by some 750,000 barrels," Pimco added.
President Donald Trump pulled the United States out of the Iran nuclear agreement in May, allowing sanctions against Iran to snap back into place. The first wave of sanctions went into effect last month and a second set of sanctions on Iran's crude exports are slated for early November.