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Crude down in Asia on API build, China industrial data shrugged off

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Investing.com - Crude prices fell in Asia on Wednesday after disappointing figures from industry on U.S. inventories overnight and shrugging off upbeat industrial figures from China, though the market is awaiting official data later in the day.

On the New York Mercantile Exchange crude futures for July delivery fell 0.97% to $46.01 a barrel, while on London's Intercontinental Exchange, Brent eased 0.84% to $48.31 a barrel.

China, the world's second largest crude importer, reported industrial production for May rose a faster than expected 6.5% on year, and retail sales also gained a clip quicker at 10.7%, while fixed-asset investment came in a less than seen 8.6%. China also said crude oil production fell 3.7% in May from a year earlier to 16.26 million metric tons, or 3.83 million barrels per day (bpd), the lowest daily level on record, Crude runs rose 5.4% at 46.62 million metric tons, or 10.98 million bpd, retreating from a record in March.

U.S. crude inventories rose 2.753 million barrels at the end of last week, the American Petroleum Institute (API) said on Tuesday, well above the 2.739 million barrels decline expected.

Gasoline supplies gained 1.794 million barrels compared with a drop of 457,000 barrels seen and distillates dropped 1.451 million barrels compared with a build of 686,000 barrels expected. Supplies at the Cushing, Oklahoma oil hub were down by 833,000 barrels.

Overnight, crude futures settle higher on Tuesday, as investors looked ahead to fresh U.S. crude inventory data expected to show draw in crude stockpiles, offsetting concerns about an uptick in output from OPEC members.

Crude futures started the day on the front foot, as Saudi Arabia pledged to reduce exports to customers in July, in an effort to help curb the glut in supply.

Sentiment, however, turned negative later during the session, following Opec's monthly report, showing that output from the group rose by 336,000 barrels a day in May to 32.14m barrels per day (bdp).

An uptick in production from both Nigeria and Libya, was singled out as the reason the market was rebalancing at a "slower pace", as both nations are exempt from supply cuts.

Investor disappointment from the OPEC report eased later during the session, as investor focus shifted to weekly inventory data from the Energy Information Administration (EIA) expected to show that crude stockpiles fell by more than 2m barrels for the week ended June 2.

Despite expectations of a drop in U.S. crude stockpiles, fears of rising U.S. shale production are expected to continue to weigh on Opec and its allies' efforts to rebalance supply and demand in the market.

The EIA released its monthly report on drilling activity Monday, showing that oil production from seven major U.S. shale plays is projected to rise by 127,000 barrels a day to 5.475 million barrels a day in July from June.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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