Forexpros – Crude oil futures moved higher during U.S. trade Wednesday as traders anticipate Thursday’s meeting of the Organization of Petroleum Exporting Countries in Vienna and bullish supply data lifted prices.
It earlier fell by as much as 1.5% to trade at a daily low of USD82.16 a barrel. Prices touched an eight-month low of USD81.11 a barrel on Tuesday.
Crude prices traded at USD83.09 prior to the release of the Energy Information Administration data.
The U.S. EIA said in its weekly report that U.S. crude oil inventories fell by a modest 0.2 million barrels in the week ended June 8, compared to expectations for a 1.4 million barrel decline. U.S. crude supplies fell by 0.1 million barrels in the preceding week.
Total U.S. crude oil inventories stood at 384.4 million barrels as of last week, just below the highest level since 1990.
Total motor gasoline inventories decreased by 1.7 million barrels, above expectations for a decline of 1.1 million barrels, after rising by 3.4 million barrels in the preceding week.
Oil prices fell to their lowest levels of the day in the wake of disappointing U.S. economic data. The Commerce Department said U.S. retail sales declined by a seasonally adjusted 0.2% in May, falling for the second successive month, marking the first back-to-back- decline in two years.
April’s figure was revised to a 0.2% decline from a previously reported gain of 0.1%.
Core retail sales, which exclude automobile sales, fell by 0.4% last month, the biggest decline since May 2010.
A separate report showed that U.S. producer price inflation fell 1.0% in May, the largest monthly decline since July 2009.
But prices came off their lows as the weak data added to expectations that the Federal Reserve may implement a third round of easing to shore up economic growth after Chicago Fed President Charles Evans reiterated his support for additional monetary stimulus on Tuesday.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Oil traders now shifted their attention to Thursday’s meeting of the Organization of Petroleum Exporting Countries in Vienna. The agency supplies nearly 40% of the world’s crude.
OPEC most recently said it was pumping 32.4 million barrels a day of oil, a level not seen since the summer of 2008 and 2.4 million barrels more than the official 30-million-barrel-limit agreed to at the last meeting in December.
Market analysts expect the oil group to keep output high as tightening sanctions reduce oil output in Iran. The country is OPEC’s second-largest producer behind Saudi Arabia, which has boosted output to account for the decline in Iranian exports.
Saudi Arabia’s Oil Minister Ali Naimi said on Tuesday his country would not ask OPEC to increase production levels at this week’s meeting, contradicting comments he made from a day earlier.
Iran and Venezuela have recently criticized other members of the cartel for producing more than the existing quota.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.
But prices declined as the market took into account assurances from Saudi Arabia that it would make up for any supply shortfalls against the potential risk for the loss of oil from Iran.
According to a Platts survey of OPEC and oil industrial officials and analysts released on June 8, oil output in Iran fell to 3.25 million barrels per day in May, while Saudi Arabia’s rose 50,000 barrels to 10 million barrels, the highest since 1980.
Meanwhile, growing concerns over rising borrowing costs in Spain and Italy, as well as jitters ahead of weekend elections in Greece, which could determine the course of the country’s future in the euro zone weighed on appetite for riskier assets.
There are worries that the region’s worsening sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery rose 0.8% to trade at 97.75 a barrel, with the spread between the Brent and crude contracts standing at USD14.02.