Oil drops two percent

Oil prices fell nearly two percent on Tuesday amid expectations that stockpiles in top consumer the United States would continue to rise heading into the peak summer driving season. Oil's losses came alongside a broad sell-off in other commodities as investors steered clear of higher-risk markets due to concerns over the rising cost of borrowing.
London Brent crude, seen as a better gauge of the global market than US oil, dropped $1.19, or 1.7 percent, to $70.17 a barrel, after gaining 18 cents on Monday. US crude slid $1.41, or 2 percent, to $67.77 a barrel.
Crude oil prices are high, not because of fundamental factors but for other reasons, and inventory levels are also high, Opec President Mohammed al-Hamli said in Istanbul on Tuesday. "We still believe the market remains well supplied," Hamli told reporters before a conference in Istanbul. "Stock levels are high". "Prices are high not because of fundamentals but because of other factors," he added.
Hamli has previously identified these factors as international political tensions and refinery bottlenecks in the United States. He said the oil producers' group, which is the source of more than a third of the world's oil, did not plan to call a meeting before its next scheduled gathering in September.
Hamli, who is also oil minister of the United Arab Emirates, said UAE oil output was currently running at between 2.58 million and 2.6 million barrels a day. Energy analysts said they expected US crude inventories, already at a nine-year high, to have risen another 1.2 million barrels last week, according to a Reuters poll.
Stocks of gasoline were also expected to have risen by 1.2 million barrels, continuing a recovery from emaciated levels this spring after a stretch of refinery outages.
"There's the forecast for a build in inventories, so you're seeing some long liquidation before the data," said Eric Wittenauer, markets analyst at A.G. Edwards. The next snapshot of US petroleum stocks is due at 1430 GMT Wednesday from the Energy Information Administration.
Prices were also pressured lower by the end of a strike in Nigeria that had threatened oil shipments from the world's eighth largest crude exporter, and Royal Dutch Shell's plans to restart exports next month from the country's Forcados terminal - using oil that is in storage. Shipments from the facility have been stopped for more than a year by militant attacks.
Worries over supply disruptions from Nigeria, where about 711,000 barrels per day of output remain closed due to the attacks on oil facilities, had helped push Brent to a 10-month high of $72.25 last week.
Opec producers, excluding Iraq and Angola, are set to pump slightly more oil in June at 26.8 million barrels per day because of higher shipments from some members including Iran and Algeria, said Conrad Gerber, head of consultancy Petrologistics.
Adding to longer term supply worries, Venezuela confirmed Tuesday that oil giants Exxon Mobil and ConocoPhillips would leave their giant oil projects in the Orinoco region after they were nationalised. US Energy Secretary Sam Bodman said on Tuesday he was concerned the departure of the oil majors could lead to lower US imports of Venezuelan oil.