Crude futures fell for a third day in early Asian trading as the market shrugged off a bigger than expected fall in U.S. inventories reported by an industry group as doubts linger over OPEC`s ability to restrain supply as promised.
Benchmark Brent crude
U.S. light crude
Crude stockpiles in the U.S. dropped more than expected last week as imports declined and refinery runs increased, while gasoline inventories increased unexpectedly, the American Petroleum Institute said late on Tuesday.
Crude inventories declined by 7.8 million barrels in the week to 478.4 million, compared with analyst expectations for a decrease of 2.7 million barrels. [API/S]
The U.S. Energy Information Administration will release its weekly petroleum status report at 10:30 a.m. ET (1430 GMT) on Wednesday.
But the market seems immune to bullish signs of falling stockpiles as the Organisation of the Petroleum Exporting Countries (OPEC) and other major producers struggle to maintain compliance with a deal to cut output and drain U.S. inventories.
"With only a few weeks left of the U.S. summer driving season, investors are starting to debate whether the current OPEC production cuts will offset the subsequent falls in demand in North America," ANZ Research said in a note.
A recovery in Libya`s oil output and higher production in Nigeria have complicated OPEC`s efforts to curb supply, while U.S. shale oil drillers have ramped up production.
Libya and Nigeria are OPEC countries that are exempt from the agreement to limit production through March 2018.
Officials from a joint OPEC and non-OPEC technical committee said on Tuesday that they expect greater adherence to the pact to cut 1.8 million barrels per day in production.
Saudi state oil company Aramco will cut allocations to its customers worldwide in September by at least 520,000 barrels per day (bpd), sources familiar with the matter told Reuters on Tuesday.