As oil prices continue to fall, the American Petroleum Institute (API) reported a mild draw of 730,000 barrels of United States crude oil inventories for the week ending June 8, compared to analyst expectations that this week would see a much larger draw in crude oil inventories of 2.744 million barrels.
Investors are looking for signs of whether OPEC will reach a consensus on boosting production, with the group set for a fractious meeting in Vienna next week.
West Texas Intermediate crude for July delivery dropped as much as 84 cents to $65.52 a barrel on the New York Mercantile Exchange and traded at $66.22 as of 11:07 a.m. London time.
The Organization of the Petroleum Exporting Countries and some non-OPEC producers, including Russian Federation, started withholding output in 2017 to reduce a supply overhang and prices have risen by around 60 percent over the a year ago.
Oil has retreated from the highs of May as Saudi Arabia and Russian Federation signaled they may increase output later this year to counter supply losses from other producers, while U.S. President Donald Trump is also pressuring them to temper crude prices.
But OPEC said on Tuesday the outlook for the oil market in the second-half of this year was highly uncertain and warned of downside risks to demand. In late May, that decline reversed and the price oil declined as Russian Federation and Saudi Arabia indicated a willingness to accept lower prices. "Unofficial sources have said Russian Federation will propose to return production back to the October 2016 (level), i.e. removing the cap altogether over a period of three months".
USA crude oil inventories rose by 830,000 barrels in the week to June 8, to 433.7 million, the American Petroleum Institute said on Tuesday. American oil production has jumped by nearly a third in the last two years to a record 10.8 million barrels per day.
While Nigeria reported diminishing oil exports in the wake of force majeure on Bonny Light oil, both Saudi Arabia and Russian Federation this week reported increased oil production for the month of May, at 10.0 million bpd and 11.09 million bpd respectively, sending mixed signals to the oil market.
"With rising production from USA shale adding to oil's woes and reviving oversupply concerns, further downside could be a possibility in the short to medium term", Otunuga said.
"The U.S.is important to us, but. we have not received any official communication, or even unofficial communication, from the administration", he told CNN.