Oil Slides Near $68 as U.S. Crude Stocks Expand, Gasoline Drops

Oil slipped toward $68 a barrel after mixed U.S. government data sowed uncertainty about the strength of demand in the biggest fuel-consuming nation.

Futures in New York fell as much as 1.4 percent after the data showed a surprise gain in nationwide crude inventories and record-high production, while robust fuel demand depleted gasoline stockpiles by the most since May. Meanwhile, an OPEC committee meeting provided little insight on how output quotas will be split between the group.

“Pronounced fluctuations in the past four weeks” have made the U.S. inventory data more difficult to assess, said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, noting that prices actually rose after the figures were released Wednesday. “Given the unexpectedly sharp increase in crude-oil stocks last week, prices should really have fallen.”

Oil has lost about 8 percent this month as the trade conflict between the U.S. and China overshadows supply threats from Venezuela to Libya and Iran. Investors are waiting to see how far other members of the Organization of Petroleum Exporting Countries will offset those output losses, and whether the U.S. will deploy its emergency stockpiles.

West Texas Intermediate crude for August delivery, which expires Friday, traded down 43 cents at $68.33 a barrel on the New York Mercantile Exchange at 8:26 a.m. local time. The contract added 68 cents on Wednesday. Total volume traded Thursday was about 26 percent below the 100-day average. The more-active September contract was down 64 cents at $67.11 a barrel.

Brent for September settlement fell 53 cents to $72.37 a barrel on the London-based ICE Futures Europe exchange, after rising 74 cents on Wednesday. The global benchmark traded at a $5.23 premium to WTI for the same month. The Brent market continues to show signs of weakness, with front-month futures trading at a discount to the second-month contract.

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The Energy Information Administration reported that U.S. crude inventories rose by 5.84 million barrels last week, confounding most analysts in a Bloomberg survey who forecast a decline. Oil production reached a record 11 million barrels a day. Along with falling refinery-utilization rates, a drop in crude exports to the lowest since April also contributed to the inventory build.

While Saudi Arabia and Russia pledged last month that OPEC would soon decide how to distribute a collective output boost of about 1 million barrels a day, the committee meeting Wednesday didn’t give a recommendation on how they should share out the planned increase.

OPEC’s committee said in a statement later that compliance with pledged output cuts was 121 percent in June, and that it was satisfied that overall performance “will not deviate from the 100 percent conformity” targeted in the deal reached June 23. Saudi Arabia, the group’s de facto leader and the biggest producer, said its output would be slightly higher this month than in June, according to people familiar with the matter.

Oil-market news:

OPEC is consulting with lawyers to prepare a strategy to defend against proposed U.S. legislation that could open the cartel up to antitrust lawsuits, according to people with knowledge of the matter. Observed crude flows from Saudi Arabia slipped to 6.74 million barrels a day in the first half of July from 7.26 million during the same period in June, according to Bloomberg tanker tracking.