Oil prices down in Asian trade

[SINGAPORE] Oil prices moved lower in Asia Thursday following a mixed US energy report that showed a huge decline in crude and gasoline reserves but record-high output levels, analysts said.

US benchmark West Texas Intermediate fell 27 cents to US$61.16 while Brent eased 19 cents to US$65.51 in late-morning trade.

The US Department of Energy's (DoE) inventory report for the week to June 5 showed Wednesday that crude reserves fell 6.8 million barrels and gasoline supplies dropped 2.9 million barrels.

But output remained stubbornly high, adding 24,000 barrels to an average 9.61 million a day during the week, the highest on record.

"Prices saw an upward lift earlier because of the inventory numbers but we haven't really seen resistance levels broken through now because the productions numbers are a concern," Ric Spooner, chief market analyst at CMC Markets in Sydney, told AFP.

Dealers have been hoping that a drawdown of the United States' burgeoning reserves during the summer months, coupled with a slowdown in its shale output, could whittle down excess global supplies.

A surplus of US stocks was one of the reasons oil prices collapsed by more than 50 per cent between June and January.

In its short-term energy outlook Tuesday, the DoE said US oil production is expected to "generally decline" through early 2016.

Dealers are also closely monitoring the possible return of Iranian supplies that have been curtailed by international sanctions against Tehran.

Six global powers - Britain, China, France, Germany, Russia and the United States - are trying to nail down a deal by June 30 to curb Iran's nuclear ambitions by reducing its stockpiles of enriched uranium and mothballing some of its sites.

If the agreement is reached and implemented, the powers will gradually scale back sanctions, allowing Iran to export much more oil than it does now.

"The market will also be watching closely the supply from Iran, as the due date for finalisation of the nuclear deal with the six world powers draws closer," said Sanjeev Gupta, head of the oil and gas practice at business consultancy firm EY.

AFP