Oil prices ended lower as a big build up in distillates including diesel overshadowed a fifth straight weekly drop in US crude stockpiles ahead of the peak season for US road travel.
Lo weighing on the prices was glum market sentiment ahead of the Organization of Petroleum Exporting Countries, which produces more than a third of the world’s crude, meeting in Vienna.
The countries are expected to ignore calls to curb their output with Iran telling other OPEC nations to expect more crude exports from the Middle East nation once economic sanctions on it are lifted.
“The view coming out of OPEC is hardening that there won’t be a cut which is adding to pressure on prices, as the surplus will remain,” Miswin Mahesh, London-based commodities analyst at Barclays Plc, told Bloomberg by phone.
“The Saudis could have been more disciplined with their output but instead have produced at 10.3 million to 10.4 million barrels a day.”
A report by the government run Energy Information Administration showed that US inventories declined by 1.95 million barrels in the week ending 30th May, The decline was more than the 1.7 million consensus estimate of analysts polled by the Wall Street Journal.
US inventories have fallen by more than 14 million barrel in the last five weeks but are still holding at record levels.
“They’re drawing, but they’re drawing from absolute high levels, In addition, refineries processed less crude last week, and imports and production rose.” Kyle Cooper, analyst at IAF Advisors in Houston, told Fox Business.
“I don’t know how you have any draw in crude when you have those types of supply numbers,” he said
Light sweet crude for June delivery ended $1.62 or 2.32% lower at $59.64 a barrel on the New York Mercantile Exchange. Based on the most active contracts, this is the lowest these prices have been since May 28.
Brent for July delivery fell $1.69 or 2.6% to $63.80 a barrel on the London Based ICE Futures Exchange.
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