Oil prices little changed despite US crude stock draw

[NEW YORK] Oil futures were mostly steady on Wednesday as price support from a larger-than-expected decline in US crude inventories was countered by a lull in equities.

Brent crude futures settled at US$61.82 a barrel, shedding 32 cents, or 0.5 per cent. US West Texas Intermediate (WTI) crude futures settled at US$53.76 a barrel, falling 14 cents, or 0.26 per cent. On Tuesday, WTI had recorded its biggest daily rise since early January.

After swelling to near two-year highs, US crude stocks fell 3.1 million barrels last week, compared with analysts' expectations for a draw of 1.1 million barrels, the Energy Information Administration (EIA) said. Refined products also posted surprise drawdowns due to a rise in refining and crude exports, as well as a drop in crude production.

Oil prices briefly turned positive after the EIA report.

"I think, overall, it was a positive report," said Phil Flynn, analyst at Price Futures Group in Chicago. "Even with the bullish report, after the big run-up yesterday, the market is hesitant to drive a lot higher."

A nearly flat day on Wall Street also limited oil prices, which often follow equities.

Equities held steady after the US Federal Reserve's decision to hold interest rates steady, as expected, after concluding a two-day policy meeting on Wednesday.

"The crude oil market is correlating to that," said Bob Yawger, director of energy futures at Mizuho in New York. "I don't think it's more than a sentiment thing along those lines."

Tensions remain high in the Middle East after last week's tanker attacks, which boosted oil prices. Fears of a confrontation between Iran and the United States have mounted, with Washington blaming Tehran, which has denied any role.

Mr Trump said he was prepared to take military action to stop Iran having a nuclear bomb but left open whether he would approve the use of force to protect Gulf oil supplies.

Oil markets, however, largely shrugged off a rocket attack on a site in southern Iraq used by foreign oil companies, including US energy giant ExxonMobil.

Three people were wounded in the attack, which threatened to further escalate US-Iran tensions in the region.

Members of the Organization of the Petroleum Exporting Countries agreed to meet on July 1, followed by a meeting with non-Opec allies on July 2, after weeks of wrangling over dates.

Opec and its allies will discuss whether to extend a deal on cutting 1.2 million barrels per day of production that runs out this month.

REUTERS