Oil prices fell on Wednesday after an industry report signaled petroleum inventories in top consumer the United States were headed for a record, following an unexpected sharp increase in crude stocks last week.
U.S. crude for September delivery fell as much as 0.45 percent to $75.43 a barrel, and was down 9 cents at $75.68 by 0515 GMT (1:15 a.m. EDT). ICE Brent for October fell 21 cents to $76.72, after flipping into a premium to the U.S. benchmark on Tuesday.
Prices are now centered near the mid-point of this year's $64.24-$87.15 trading range, as recovering energy demand has been insufficient to drain ample supplies, leading to an unseasonal raft of seven consecutive weeks of gains in U.S. gasoline stockpiles and eleven in distillate inventories, including diesel.
It looks like the oil product market is very comfortably supplied and that demand conditions remain lackluster, said Stefan Graber, a commodities analyst with Credit Suisse in Singapore.
It will probably take a few weeks until we see decisive improvements.
The American Petroleum Institute late on Tuesday said U.S. crude stockpiles rose by almost 5.9 million barrels last week, compared with analysts' expectations for a 1-million-barrel drop.
Gasoline stocks rose 2 million barrels, the API said, compared with forecasts for a 100,000 barrel decline, while distillates including diesel rose 2.1 million barrels, topping predictions for a 1.5 million barrel gain in a Reuters survey.
Supplies of gasoline normally fall over the summer as consumption peaks in the Northern Hemisphere. The unusual supply build-up sent futures prices of gasoline component RBOB on the New York Mercantile Exchange to their lowest in almost three months earlier this week.
If the API data is confirmed on Wednesday by weekly government statistics on inventories and demand from the U.S. Energy Information Administration, it would send the country's combined crude and product inventories to a record high.
Last week's EIA data showed combined crude and product stockpiles at 1.125 billion barrels -- 3.5 million higher than at the same time last year and 2.1 million below the record high set back in 1990, when the U.S. government started publishing the data.
An unusual premium of front-month Brent over U.S. benchmark West Texas Intermediate (WTI) crude reached its widest level in two months on Tuesday on speculation that a glut at the Cushing, Oklahoma pricing point for WTI was expanding. It remained steady at slightly more than $1 a barrel on Wednesday.
Crude supplies at Cushing stood at 37.7 million barrels in the week through August 6, just shy of a record 37.9 million barrels in mid-May, according to the EIA.
OPEC'S SWEET SPOT
Oil prices have mostly hovered around the sweet spot for the Organization of the Petroleum Exporting Countries (OPEC) in the $70-$80 range this year, after the group relaxed compliance with 2008 production cuts.
But the crude market has been rattled by the influence of currency and stock market fluctuations on an intraday basis as investors reduce or increase risk exposure, especially at the height of Europe's sovereign debt crisis in May, when prices reached both the highs and the lows for the year.
Prices were also under pressure from a stronger dollar on Wednesday, which outdid the lift provided by rising Asian stock markets. The greenback gained about 0.16 percent against a basket of currencies, after falling 0.4 percent the previous day. .DXY
Japan's Nikkei average rose on Wednesday, with exporters such as Canon Inc (7751.T) gaining after strong U.S. corporate earnings helped Wall Street rise a day earlier. .T .N
Encouraging industrial production data from the U.S. also boosted U.S. equities on Tuesday.
We are still in expansionary territory, and beyond the somewhat weaker summer months, a pick-up in activity should translate into rising oil consumption in the U.S., Graber said.
The U.S. National Hurricane Center said late on Tuesday that a tropical wave over the central Caribbean Sea had a 10 percent chance of developing into a tropical cyclone over the next 48 hours.
(Editing by Michael Urquhart)