But the Iran stance could cause a modest uptick soon: File Image/Pixabay
A larger than expected crude inventory drawdown offset by large builds in refined product inventories led to crude prices on Wednesday falling over 1 percent, extending a 3 percent-plus drop in prices in the previous session.
According to Energy Information Administration data, U.S. crude inventories fell 3.1 million barrels compared to analysts' forecasts for a 2.7 million barrel decrease; however, gasoline stocks rose 3.6 million barrels compared with expectations in a Reuters poll for a 925,000 barrel drop (distillate stockpiles grew by 5.7 million barrels compared to an expected 613,000 barrel increase).
Accordingly, Brent on Wednesday declined 69 cents, or 1.1 percent, to settle at $63.66 per barrel; West Texas Intermediate fell 84 cents, or 1.5 percent, to settle at $56.78 per barrel.
John Kilduff, founding partner, Again Capital
The focus this time of year is gasoline, and that data point was squarely bearish
John Kilduff, founding partner at Again Capital, said, "The focus this time of year is gasoline, and that data point was squarely bearish."
However, it could be that crude prices will enjoy a momentary uplift in coming days, given that Iran has denied it is willing to negotiate over its ballistic missile program, contradicting an earlier claim by from Washington that caused a 3 percent drop in prices on Tuesday.
Analysts at PVM Oil Associates wrote, "It is hard to believe that either the United States or the Iranian stance would change drastically, therefore yesterday's sell-off might turn out to be an excellent buying opportunity."
Helima Croft, head of global commodities strategy for RBC Capital Markets, said that while Tuesday's selloff was an overreaction, "The question is now that the Iranians are disputing this, do they potentially harden their resolve to try to get sanctions relief through escalation [of their missile program]?"