2013.08.1406:28:31UTC+00Oil futures decline under forecast supply pullback

Crude-oil futures slide down in electronic transaction Wednesday after data displaying the weekly decline in U.S. crude inventories came in shy of projections.

Benchmark U.S. crude oil for September delivery slumped 24 cents down, or 0.2%, to $106.59 a barrel, surrendering a part of its 72-cent increase in Tuesday’s New York Mercantile Exchange trading session.

Likewise, September Brent crude saw a bigger pullback of 43 cents, or 0.4%, to $109.39 a barrel, erasing roughly half of its 85-cent gain on Tuesday.

The losses for Nymex crude flowed out of a smaller than expected decline in U.S. oil supplies for the week ended Aug. 9.

Reports cited the American Petroleum Institute as saying crude stocks missed by 999,000 barrels for the week, missing a consensus forecast for a 1.5 million-barrel decrease, according to a Platts survey of analysts.

Citi Futures analysts, however, saw the inventory drop as “within the range of expectations,” but saw the larger outlook for the commodity as more negative than positive.

“Although we think crude oil may continue to work higher in the near term, we consider it overvalued, given its forward likely global supply/demand surplus and believe it has become a crowded trade,” Citi Futures said in a note late Tuesday after the API data.

“Upside potential may be limited to $1 to $2, compared with an intermediate-term downside risk that may be $15 or more,” they wrote.

The API report came ahead of the U.S. Energy Information Administration’s own weekly inventory data — which are generally given more weight by traders — due out later Wednesday at 10:30 a.m. U.S. Eastern time.

The dollar offered little support or resistance for the oil market, with the ICE dollar index trading almost flat at 81.780, compared to 81.772 late Tuesday in North America.

In other energy trading Wednesday, September gasoline exchanged 0.2% lesser — a loss of less than a penny — to hold at $2.94 a gallon, while September heating oil also retreat by about 1 cent, or 0.2%, to $3.04 a gallon.

The API data reportedly showed stockpiles up 1.7 million barrels versus calculations from the Platts survey for a drop of 2 million barrels, helping weigh on the futures.

Distillate supplies, including heating oil, bolstered by 1.1 million barrels, roughly in line with expectations for a 1 million barrel build-up.

Overall, the API report was “mixed,” with the gasoline-supply rise bearish, but the supply draw at Cushing, Okla., the delivery hub for Nymex futures, “supportive,” according to Price Futures Group senior market analyst Phil Flynn.

Meanwhile, September natural gas offered a bright spot, increasing 1 cent, or 0.4%, to $3.30 per million British thermal units.