Oil prices fell for a second day today after an industry report showed unexpected gains in US crude and gasoline inventories, while weak US home sales data drove equities lower and dampened risk appetite.
Global stock markets fell after a report yesterday showing that sales of existing homes in the US dropped unexpectedly in May. Japan's Nikkei average fell 1.6 per cent today as the positive impact of China's yuan revaluation faded.
"If the stock market is going down, it is a factor to drive the crude market lower," said Ken Hasegawa, a commodity derivatives manager at brokerage Newedge in Japan. "People continue profit taking after the API stockbuild."
US crude for August delivery slid 49 cents to $77.36 a barrel by 0326 GMT, after the July contract expired on Tuesday. Prices are little changed this week after a jump to almost $79 two days ago following China's weekend decision to make the yuan exchange rate more flexible. ICE Brent for August fell 35 cents to $77.69.
US crude prices have recovered about 20 per cent from a trough below $65 a barrel a month ago, but are still about $10 lower than an early-May 19-month peak above $87.
Crude stockpiles in the US rose 3.7 million barrels last week, the American Petroleum Institute (API) said yesterday, while gasoline supplies climbed 810,000 barrels.
US stockpiles of distillates including heating oil and diesel rose 1.1 million barrels last week, the API said, broadly in line with analyst forecasts.
Traders are also watching for government statistics on US oil inventories and demand from the Energy Information Administration due today at 2.30pm.
Investors also awaited today's conclusion of a two-day US Federal Reserve's Federal Open Market Committee meeting, with a statement due at 6.15pm, for signs that low interest rates will remain intact.
The oil market showed little reaction to the publication of the yuan's trading range mid-point today, even after the central bank of China set it slightly stronger than yesterday's close. Oil prices posted short-lived gains yesterday after the bank set the mid-point at its strongest since 2005.
Reuters