Oil was under pressure today from a stronger dollar and brimming US petroleum inventories, while modest gains in Asian equities provided support to a market focused on the prospects for economic growth.
US September crude fell 11 cents to $75.31 a barrel at 0444 GMT, while ICE Brent fell 18 cents to $76.29.
Prices have this week shown signs of stabilising above $75, a level that most traders and analysts say is representative of the current fundamental balance. That is also close to the mid-point of this year's $64.24-$87.15 trading range, as demand growth has been insufficient to drain ample supplies.
The US benchmark touched a six-week low at $73.83 yesterday, after the Department of Energy said total US petroleum stockpiles last week soared to a 20-year high on a weekly basis. Prices then tracked Wall Street higher on an upbeat forecast from US retailer Target.
A steady market is discouraging investors who thrive on volatility from actively trading oil, leaving prices under the influence of currency and stock market moves, said Keichi Sano, general manager of research at SCM Securities in Tokyo.
"This lacklustre market has no momentum, incentive, power or direction," Sano said. "The DOE numbers don't change the mood."
"If they had a good interest in participating in the market, or if they had enough long or short positions, the numbers should move the market, but not many people are holding exciting positions."
Money managers cut net long crude oil positions on the New York Mercantile Exchange in the week through August 10th, according to the Commodity Futures Trading Commission.
The dollar strengthened by 0.4 per cent against a basket of currencies today, while the Nikkei gained 1 per cent.
Prices might take their next cue from today's weekly US jobless claims report, seeking evidence that the economic recovery is continuing apace.
For most of this year, oil prices have hovered around the sweet spot for the Organization of the Petroleum Exporting Countries (Opec) in the $70-$80 range, after the group relaxed compliance with 2008 production cuts as demand rebounded.
US commercial crude and product inventories rose last week to the highest level since the US government began tracking weekly data in 1990, statistics published yesterday showed, a sign fuel supply is outpacing demand amid a slow US economic recovery.
In aggregate, total commercial crude and product stocks rose to 1.130 billion barrels in the week to August 13th, according to a weekly report from the Energy Information Administration, above the previous weekly record high of 1.127 billion barrels set in September 1990.
Before EIA began breaking out weekly stocks data, it measured monthly inventory levels, which once totaled as high as 1.36 billion barrels in August 1980.
The rise in total commercial stocks came even as domestic crude stocks fell 818,000 barrels and gasoline by 39,000 barrels. Distillate stocks rose 1.1 million barrels, their 12th consecutive weekly increase.
Inventories at the key Cushing, Oklahoma hub fell by 687,000 barrels to 37 million. Cushing is the delivery point for the New York Mercantile Exchange's benchmark West Texas Intermediate crude futures contract.
The US National Hurricane Center said late yesterday a tropical wave over the west central Caribbean Sea south of eastern Cuba still had a low 20 per cent chance of developing over the next 48 hours as it moves west.
Reuters