Crude oil futures settled down more than 1 percent on Wednesday after a government report showing an eighth straight weekly drop in US crude stockpiles was offset by a large build in refined products. Uncertainties about progress in the Greek debt crisis added to the energy market's skittishness, even as support emerged from roadblocks to an Iranian nuclear deal aimed at allowing Tehran to resume oil exports without restrictions.
Brent futures settled down 96 cents, or 1.5 percent, at $63.49 a barrel. US crude ended down 74 cents, or 1.2 percent, at $60.27. The US Energy Information Administration said crude stockpiles fell 4.9 million barrels last week, versus a 2.1 million-barrel draw expected by analysts in a Reuters poll. The EIA also said gasoline stockpiles rose 680,000 barrels, versus a forecast drop of 304,000 barrels.
Inventories of distillates, which include diesel and heating oil, jumped 1.8 million barrels, more than an expected build of 1 million. "The rise in gasoline inventories is more than enough to offset the crude oil inventory decline and makes the report a neutral one for the market," said John Kilduff, partner at New York energy hedge fund Again Capital.
Gasoline futures fell more than 1 percent while ultra-low sulfur diesel lost just over 2 percent. The products markets have dictated the price trend for crude over the past two weeks as demand for motoring fuels surged in the run-up to the peak US summer driving season. US gasoline demand in the week to June 19 was at its highest level for the period since 1991, while total petroleum product demand was the highest for the period since 2007, according to EIA data.
Tariq Zahir, an oil bear at the energy-focused New York fund Tyche Capital Advisors, said the Greek and Iran crises would have to exert greater influence on crude in coming sessions if the market was to "break out of the trading range we've been in." Brent has been trapped in the $62-$65 range over the past two weeks while US crude has stayed within $58 to $61. In Greece, international creditors demanded sweeping changes to Prime Minister Alexis Tsipras' tax and reform proposals, adding fresh uncertainty to talks aimed at averting a debt default.
In Iran, potential hurdles remained for a nuclear accord that held the key to unlocking Western sanctions on Tehran oil exports. Iran's supreme leader on Tuesday ruled out freezing sensitive nuclear work for a long time while Tehran's parliament banned access for UN inspectors to its military sites and scientists, potentially thwarting a June 30 deadline for the accord.