Investing.com – WTI crude oil prices settled sharply lower Wednesday, shrugging off a larger-than-expected draw in U.S. crude stockpiles as raising OPEC output, and the reopening of terminals in Libya dented investor expectations for a global supply shortage.
On the New York Mercantile Exchange crude futures for July delivery fell 5% to settle at $70.38 a barrel, while on London's Intercontinental Exchange, Brent fell 6.7% to trade at $73.56 a barrel.
Inventories of U.S. crude fell by 12.633 million barrels for the week ended June 30, confounding expectations for a draw of 4.489 million barrels, according to data from the Energy Information Administration (EIA).
The large draw in crude supplies came as imports fell by 1.624m barrels a day (bpd), and output remained roughly flat at 10.9 million bpd, the EIA said. The production shutdown at Canada's Syncrude - which has capacity to produce 350,000 bpd of oil – continued to weigh on North American crude supplies.
Gasoline inventories – one of the products that crude is refined into – fell by 0.649 million barrels, missing expectations for a draw of 0.750 million barrels, while supplies of distillate – the class of fuels that includes diesel and heating oil – unexpectedly rose by 4.125 million barrels, against expectations for a build of 1.200 million barrels.
The mostly bullish inventory report failed to lift sentiment amid investor concerns about an increase in global supplies as OPEC output increased last month, while Libya resumed export activities, which could see as much as 0.7 million bpd return to the market.
OPEC output rose above 32.3 million bpd in June, up 173,000 bpd from the previous month, according to OPEC's monthly report. The increase was led by a rise in Saudi output to levels not seen since the output-cut agreement in 2016.
Saudi Arabia reported that it pumped nearly 10.5 million bpd last month, up from about 10 million bpd in May.
OPEC, in its monthly report, said it expects the pace of oil demand growth to slow, but still increase by 1.45 million bpd in 2019.
The oil-cartel also said it expects non-OPEC production to rise by 2.1 million barrels in 2019, led by a surge in U.S. output.