NYMEX crude up in Asia as API report shows sharp drop in crude stocks

Investing.com - Crude oil prices gained in early Asia on Wednesday after U.S. industry data showed an unexpected drop in U.S. stocks.

The American Petroleum Institute said total crude stockpiles fell 6.5 million barrels last week, gasoline stockpiles remained flat, distillate stockpiles rose 2.5 million barrels and refinery run rates increased 1.9 percentage points to 93% of capacity, according to a posting by Platts Oil on Twitter.

In the New York Mercantile Exchange, West Texas Intermediate crude oil futures for delivery in January traded at $67.63 a barrel, up 0.51%, after hitting an overnight session low of $66.74 a barrel and off a high of $69.40 a barrel.

The global Brent benchmark fell 2.8% to $70.54 a barrel on the ICE Futures Europe exchange on Tuesday.

A more closely watched survey from the Energy Information Administration is due at 10:30 a.m. EST Wednesday and expected to show gasoline stockpiles up by 1.04 million barrels, while crude supplies are seen up 1.3 million barrels and distillates down 180,000 barrels.

Overnight, crude futures dropped on Tuesday after an upbeat construction gauge boosted the U.S. dollar, while ongoing concerns that supply will remain ample while demand soft pushed prices lower as well.

A stronger greenback tends to make oil a less attractive commodity on dollar-denominated exchanges, especially in the eyes of investors holding other currencies.

The Census Bureau reported earlier that U.S. construction spending rose 1.1% in October from a month earlier, beating market estimates for a 0.6% gain after a 0.1% contraction in September.

It was the largest gain since May, and the report boosted the dollar by cementing expectations for the Federal Reserve to hike benchmark borrowing costs in 2015, which sent oil prices dropping in a selloff exacerbated by supply concerns.

The Organization of Petroleum Exporting Countries said last week that it would keep its official production target unchanged at 30 million barrels a day, disappointing hopes the oil cartel would lower output to support the market.

The 12-member group is responsible for approximately 40% of global supply.

Concerns over weakening global demand combined with indications that OPEC producers will not cut output have weighed on prices in recent months as have the realizations that conflicts in the Mideast and in Eastern Europe have not disrupted supply as once feared.

Markets have assumed that Saudi Arabia championed letting prices fall in hopes less cost-effective U.S. shale producers would halt operations.

Still, concerns that less shale out flowing out of the U.S. will take a while to chip away at a global supply glut dampened prices on Tuesday.