CHART: US crude oil inventories are still above historic norms

US gasoline stockpiles probably fell by 50,000 barrels last week, according to the median forecast in a Bloomberg survey before the EIA report.

Throughout a almost three-year downturn, American oil companies have driven down the cost of advanced drilling methods, allowing them to pump profitably, even with U.S. West Texas Intermediate crude (New York Mercantile Exchange: @CL.1) trading between about $45 and $55 a barrel - roughly half of peak 2014 prices. Following the release, WTI futures dropped more than 4% to trade at $46.12 per barrel.

Crude inventories rose by 3.3 million barrels (bbl) in the week ended June 2, compared with expectations for a decrease of 3.5 million bbl, the first such increase in 10 weeks.

Breaking down the gasoline portion of the report, the EIA data showed a drop in gasoline demand of about a half million barrels a day.

Commodities brokerage Marex Spectron said it expects "lower supply of crude oil on the physical market" in the coming weeks, adding that "this is likely to provide support to the price" of oil.

By comparison, 24 countries including Saudi Arabia and Russian Federation made a pact in late May to keep 1.8 million barrels a day off the market through the first quarter of next year.

Many investors are wary ahead of Mr Comey's Senate appearance as they look for any hints that US President Donald Trump may have been engaged in obstruction of justice - an offence that could lead to impeachment hearings.

As of March 17, U.S. oil production in the U.S. Gulf of Mexico had reached a record of 1.76 million barrels a day, which is 33 percent higher than production in March 2014.

Brent for August settlement was 14 cents lower at $49.98 a barrel on the London-based ICE Futures Europe exchange.

Leading Arab powers including Saudi Arabia, Egypt and the United Arab Emirates cut ties with Qatar on Monday, accusing it of supporting Islamist militants and Iran.

The U.S. Energy Information Administration report on oil inventories is due this week on Wednesday at 10:30 a.m. EDT.

Some analysts saw a risk that rivalries between OPEC members could weaken the production cut agreement. A jump in gasoline supplies also weighed on oil prices, he said.

  • Zachary Reyes