United States crude oil stocks drop

“Total motor gasoline inventories increased by 1.5 million barrels last week, and are near the upper limit of the average range”, said the report.

US West Texas Intermediate (WTI) crude futures were also down 4c at $52,61 a barrel.

Last week the prices of oil had gone past $53 a barrel following the push by some producers to extend the OPEC supply cut deal by the more than 6 months that had been settled on.

“The rebalancing in US crude stocks may have got under way, but concerns of further gasoline builds are rife even as the USA summer driving season shifts up a gear”, said Stephen Brennock, an analyst with PVM Oil Associates.

Traders said that the rising US crude production posed a concern that the oil supply overhang would continue, while the jump in gasoline stocks implied a stutter in demand.

While compliance has been strong among OPEC countries, production cuts have lagged among other producers including Russian Federation.

The Organisation of Petroleum Exporting Countries and other major producers are committed to reducing oil stockpiles, and all countries participating in a six-month deal to pare output are committed to restoring the market’s stability, Barkindo said at a conference in Abu Dhabi.

“The battle between the “sheiks and the shale oil producers” is far from decided. with all attempts by OPEC to achieve a lasting production deficit on the oil market being torpedoed by non-OPEC producers – first and foremost the USA”, analysts at Commerzbank wrote.

Oil prices were resilient in an immediate reaction to the data before dipping lower.

In London, June Brent crude LCOM7, -3.75% on the ICE exchange shed 16 cents, or 0.3%, at $54.73 a barrel. However, that level was still near a record high.

Oil dropped to a two-week low after a report showed US gasoline supplies gained for the first time in nine weeks as crude output rose.

Oil markets winced early on Tuesday after Saudi Arabia’s Energy Minister Khalid A. Al-Falih told reporters in Riyadh that “it is premature to talk about extending the cut”, dampening the excitement The Kingdom incited previously by saying it would be willing to extend the cuts.

US inventories now sit at 532.3 million barrels, only down about 3 million units from the record reached in March.

“All the signs of an ever-growing bull market are starting to fade away, (with) Libya and geo-political tensions easing, but also because the Texans are back and they are pumping like there’s no tomorrow”, said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.