Oil prices eased on Tuesday as concerns over a crude and refined fuel glut outweighed an expected cut in U.S. shale production and a probable further draw in U.S. crude inventories.
Crude prices fell more than 1 percent in the previous session after worries about potential supply disruptions stemming from an attempted coup in Turkey proved unfounded.
“Prices are a bit softer in the Asian trading period – traders and investors are torn which way prices are going to break. It’s a knife edge between optimism and pessimism,” said Ben Le Brun, market analyst at Sydney’s OptionsExpress.
The market is waiting for U.S. crude stocks data on Tuesday and Wednesday to help give direction to prices, he said.
Brent crude slipped 11 cents to $46.85 a barrel as of 0657 GMT after finishing the previous session down 65 cents, or 1.4 percent.
U.S. crude, known as West Texas Intermediate (WTI), fell 11 cents to $45.13 a barrel after settling 71 cents, or about 1.6 percent, lower in the previous session.
Fuel inventories in the United States, Europe and Asia are brimming despite this being the peak summer driving season, leading traders to store diesel on tankers at sea amid wilting demand growth. With landed oil product storage nearly full as well, there is little support for any sustained recovery in crude prices even as output tapers.
U.S. shale oil production is expected to fall in August for a tenth straight month, by 99,000 barrels per day (bpd) to 4.55 million bpd, according to a U.S. drilling productivity report on Monday.
Further weighing on supply, U.S. commercial crude oil inventories likely fell by 2.2 million barrels last week, a Reuters poll of analysts showed on Monday.
That would be the ninth consecutive week stocks have fallen. The poll was taken ahead of weekly oil stocks reports due on Tuesday from the American Petroleum Institute (API) and on Wednesday from the U.S. Department of Energy’s Energy Information Administration (EIA).
Giving some support to prices, China’s crude oil imports – which slowed partly due to seasonal refinery maintenance in May and June – could rebound in the second half of the year as refineries there further diversify sources of supply, shipbroker Banchero Costa (Bancosta) said in a report on Tuesday.
China’s crude imports grew 14.2 percent during January to June, with most of the gains coming from huge increases in supply from Russia, Oman, Iraq and Brazil, said Ralph Leszczynski, head of research at Bancosta.