Oil edged lower on Wednesday not able to shake off the negative mood of the last two days in response to a sharp rise in U.S. stockpiles of products like gasoline, pointing to weak demand through the summer season driving season in America.
Brent crude futures were down by 10 cents at $63.56 a barrel by 0840 GMT. They fell 1% on Wednesday, and 3% on Tuesday.
U.S West Texas Intermediate crude futures were down 19 cents at $56.59. The U.S. benchmark dropped 1.5% in the previous session, and 3% on Tuesday.
Mixed signals from America and Iran also left the market in limbo. United State President Donald Trump said on Tuesday progress had been made with Iran, but Tehran denied it was willing to negotiate over its missile program.
On Wednesday U.S. officials also said they were not sure whether an oil tanker towed into Iranian waters was gained, or rescued.
Data on Wednesday from the United States Energy Information Administration (EIA) showed a larger-than-expected drawdown in crude stockpiles last week, but traders focused instead on large builds in refined product inventories dragging prices down.
U.S. crude inventories fell 3.1 million barrels, and the EIA stated, more than analysts’ forecasts for a reduction of 2.7 million barrels.
But gas stocks rose 3.6 million barrels, compared with analyst’s expectations in a Reuters poll for a 925,000-barrel drop. Distillate stockpiles raised by 5.7 million barrels, much more than expectations for a 613,000-barrel expand, the EIA data showed.
Tamas Varga PVM analyst said, “Due to the combination of unattractive weekly statistics on U.S. oil inventories from the EIA and sluggish performances from the stock markets Tuesday’s sell-off didn’t turn out to be a buying opportunity, at least not for the time being.”
Crude production was interrupted last week by Storm Barry, which came ashore on Saturday in central Louisiana as a Category 1 hurricane, the first significant storm to hit the U.S. Gulf of Mexico this season.
More than half of daily crude production in the Gulf of Mexico remained offline by Tuesday, as most oil companies were re-staffing facilities to resume production.
The “easing of tensions between the U.S. and Iran, mixed Chinese development data and storm-hit operations getting back online are all pressuring oil prices downward,” Alfonso Esparza senior market analyst at OANDA, said.
Japan’s exports fell for a seventh straight month in June, with shipments to China falling more than 10%, while Japanese manufacturers’ business confidence fell to a 3-year low.