Oil traded near $60 a barrel before U.S. government data forecast to show crude stockpiles in the world’s biggest consumer declined for an eighth week.
Futures dropped as much as 0.7 percent in New York. Crude inventories probably shrank by 1.5 million barrels through June 19, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Iranian and European officials accused each other of backing away from a nuclear agreement as a June 30 deadline for an accord approaches.
Oil’s recovery from a six-year low has slowed on signs a supply glut is persisting. U.S. crude stockpiles are still almost 90 million barrels above the five-year average for this time of the year as output remains near a record. Iran, OPEC’s fifth-largest producer, has estimated it could double exports within six months of international sanctions being lifted.
“Oil is still in a range,” said Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, adding that U.S. fuel demand typically peaks in the summer. “A nuclear deal might release additional barrels and that glut might become more of a story, we’ll have to see what transpires there.”
West Texas Intermediate for August delivery fell as much as 42 cents to $59.96 a barrel in electronic trading on the New York Mercantile Exchange, and was at $60.03 at 12:33 p.m. Singapore time. The July contract expired Monday after climbing 7 cents. Total volume was about 51 percent above the 100-day average. Front-month prices have advanced 13 percent this year.
Brent for August settlement was 22 cents lower at $63.12 a barrel on the London-based ICE Futures Europe exchange. It gained 32 cents to $63.34 on Monday. The European benchmark crude traded at a premium of $3.08 to WTI.
U.S. crude inventories slid to 467.9 million barrels through June 12, EIA data showed. Production averaged 9.59 million a day, near the fastest pace in weekly records compiled by the Energy Department’s statistical arm since January 1983.
Refinery utilization probably increased by 0.4 percentage points to 93.5 percent in the week ended June 19, according to the median projection in the Bloomberg survey of six analysts.
Iran needs to “negotiate constructively, rather than trying evasive maneuvers, in the last meters,” German Foreign Minister Frank-Walter Steinmeier said in Luxembourg as European officials met with Iranian Foreign Minister Mohammad Javad Zarif. All sides in the discussions should avoid being “excessive,” Zarif told reporters.
Diplomats from China, France, Russia, the U.K., the U.S. and Germany are facing the self-imposed June 30 deadline in talks aimed at placing curbs on Iran in return for the lifting of sanctions. The Persian Gulf nation is currently allowed to export about 1 million barrels a day of oil.
The Organization of Petroleum Exporting Countries, whose 12 members are responsible for about 40 percent of the world’s supply, maintained its output quota at 30 million barrels a day at a June 5 meeting. Saudi Arabia, Iraq and United Arab Emirates, the group’s biggest producers, each pumped at a record in May, according to the International Energy Agency.
The Chicago Board Options Exchange Crude Oil Volatility Index closed at 30.06 on Monday, signaling the least volatile trading since May 15.