Oil Prices Fall After EIA Confirms Crude Inventory Build

Oil markets still pressured by persistent risk of oversupply

Still, oil futures pared losses briefly after the data, which also showed growing USA demand. The U.S. Energy Information Administration data is due on Wednesday.

Analysts said sentiment dampened after oil prices fell in global markets, with Brent futures set for their biggest monthly loss in two years, on oversupply concerns after a report showed Organisation of the Petroleum Exporting Countries' (OPEC) output in July rose to its highest for 2018.

Signs that a supply disruption in the Bab al-Mandeb Strait in the Red Sea could be resolved weighed on prices.

Oil prices are likely to hold fairly steady this year and next as increased output from OPEC and the US meets growing demand led by Asia and helps to offset supply disruptions from Iran and elsewhere, a Reuters poll showed on Tuesday.

Oil prices have decreased after OPEC production was raised. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.2% at $67.95 a barrel.

The initial deal, under which OPEC and non-OPEC producers are cutting supply by about 1.8 million barrels per day, had expired in March 2018.

The main worldwide benchmark, Brent crude, fell 72 cents while the main U.S. benchmark, WTI, dropped $1.37.

USA crude stocks fell in the week of July 20th by 6.1mn barrels, while U.S. drillers added another three rigs to their oil drilling inventory.

USA inventories are forecast to have fallen by 3 MMbbl last week, according to a Bloomberg survey of analysts before government data due Wednesday. Novak said that higher production was due to the need to maintain the market's stability.

What an interest rate rise means for you
In the Inflation Report accompanying the decision, the BOE kept its economic-growth predictions for Britain broadly unchanged. The Bank of England will also release its latest forecasts for economic growth, jobs and inflation on Thursday.

So far this year, WTI Crude prices have averaged $66.16 per barrel, and were down 0.47 percent at $69.80 at 07:58 a.m. EDT on Tuesday.

Another major event on Wednesday was Yemen's Houthi's attack on the Saudi oil tanker in the Red Sea.

OPEC production rose in June, led by Saudi Arabia, and reached a 2018 high in July, a Reuters survey found on Monday, although declines from Iran, facing US sanctions, and other producers limited the increase.

Oil prices rebounded from levels reached over the past two weeks as USA sanctions threatened against Iran began to cut exports from Tehran.

Prices remain buoyed by a tight supply outlook, with global inventories down from record highs in 2017 and US inventories at three-year lows, said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

A factor contributing to exceeding the target was the addition of 320,000 BPD of production from Congo, along with increases in Kuwait, UAE, Saudi Arabia and Nigeria. OPEC, plus Russian Federation and other allies, decided in June to ease supply cuts in place since 2017.

"Equity markets are in positive territory as trade tensions between the USA and China are improving", said analyst David Madden at CMC Markets UK.

Here is a look at how share prices for two blue-chip stocks and two exchange traded funds reacted to this latest report.

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