USA crude oil refinery inputs decrease last week

WTI and Brent Crude Oil

WTI and Brent Crude Oil

US crude production dropped 300,000 barrels per day in the week to July 12 to 12 million bpd, according to the EIA, a decline that analysts attributed to the storm. On Tuesday, prices plunged after a US government official said Iran was ready to negotiate regarding its missile program. US crude fell 39 cents per barrel to trade at $57.24 a barrel by 11:09 a.m. EDT [1509 GMT], while gasoline futures traded down 0.45 cent to $1.8867 a gallon.

Analysts at PVM Oil Associates wrote, "It is hard to believe that either the United States or the Iranian stance would change drastically, therefore yesterday's sell-off might turn out to be an excellent buying opportunity".

"Gasoline and distillate stocks increased strongly, which adds a bearish tone to the report", said Carsten Fritsch, oil analyst at Commerzbank.

The American Petroleum Institute said Tuesday that crude inventories fell by 1.4 million barrels in the week to July 12 to 460 million barrels.

According to data released by EIA earlier in the day, crude inventories in the US dropped by 3.1 million barrels last week, against expectations for a drop of about 2.7 million barrels. Moreover, cyclone threatened crude production in the Gulf of Mexico amid rising tension from the Middle East. Oil companies in the Gulf of Mexico had to shut over 53 percent of the regions production.

Further, a lack of progress on the US-China trade talks as well as the US-Iran geopolitical stand-off weighs down on the sentiment around oil.

"A hurricane-impacted report shows a drop in production and imports offsetting lower refining activity to yield a draw to crude stocks", said Matt Smith, director of Commodity Research at ClipperData.

Oil prices fell more than 1.6% on Wednesday, as data from the U.S. Energy Information Administration showed a large build in refined product inventories. "Nevertheless, oil production in the Gulf of Mexico returning to normal following Hurricane Barry will limit price gains", Kumar said. It is expected to show yet another drawdown.