Nymex crude drops in Asia as investors eye API estimates, Fed
Investing.com – Crude oil prices dipped in Asia on Wednesday as investors eyed the latest industry crude and refined products stocks estimate data released late overnight in the U.S. and the tone of the Federal Reserve statement ahead.
Industry group the American Petroleum Institute said that crude stocks fell fell 1.9 million barrels, while distillate stocks fell 4.3 million barrels last week in its weekly report on stockpiles. Gasoline data was not immediately available.
A separate government report from the Energy Information Administration (EIA) on Wednesday could show that crude inventories fell mildly by 0.4 million barrels for the week that ended on July 24.
Last week, the EIA reported that U.S. crude stockpiles unexpectedly rose by 2.5 million barrels for the week ending on July 27, pushing inventory levels nationwide to 463.9 million, the highest level at this time of year in at least 80 years. Analysts expected a weekly draw of 2.2 million.
On the New York Mercantile Exchange, WTI crude for September delivery dropped 0.51% to $47.73 a barrel.
Eyes are also on the Federal Open Market Committee statement due later in the day.
The FOMC could provide further hints on whether it will raise rates by September when it completes its two-day meeting on Wednesday.
Overnight, U.S. crude futures fell to their lowest level in four months before rallying on Tuesday afternoon, ahead of the American Petroleum Institute's weekly inventory report.
On the Intercontinental Exchange (ICE), for September delivery traded in a broad range between $52.30 and $54.08, before settling at 53.24, down 0.23 or 0.43% on the session. The spread between the international and U.S. domestic benchmarks of crude stood at 5.35, below Monday's level of $6.08 at the close.
Industry observers are placing a close eye on U.S. crude prices to determine a level that could force domestic shale producers to issue broad lay-offs and curtail crude output. At its current level, WTI crude futures are approaching March's yearly-low around $44 a barrel. The high fracking costs associated with shale production make it more profitable for the companies to ramp up production when crude prices are higher.
U.S. crude output, however, remains near 9.55 million barrels per day, near its highest levels in more than 40 years. Crude futures are down roughly 40% since the Organization of Petroleum Exporting Countries strategic decision in November to keep its production ceiling above 30 million bpd.
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