Oil prices drop before US inventory data

[LONDON] Oil prices fell on Wednesday with developments over Greece providing the main direction for markets.

US benchmark West Texas Intermediate for August delivery slid 86 cents to US$58.61 a barrel.

Brent North Sea crude for August dropped 60 cents compared with Tuesday's close to stand at US$62.99 a barrel.

"The Greece debt crisis may have stoked concerns of a contagion effect to the eurozone, which means that we could see a drop in demand for oil on potentially weaker growth," said Bernard Aw, a strategist at IG Markets.

The Greek situation has also weighed on the euro, making dollar-denominated oil more expensive for holders of the single currency.

Oil prices had rebounded on Tuesday as Iran and six major powers extended a deadline for reaching a nuclear deal, deferring the entry of more Iranian oil into an oversupplied global market.

Traders were awaiting the release Wednesday of US inventory data that provides indications of energy demand in the world's biggest economy.

AFP