NYMEX crude falls in Asia on profit-taking from overnight gains

Investing.com - Crude oil prices eased in Asia on Thursday, taking profits from an overnight rally in the U.S. that points to steady demand and efforts to trim domestic output.

On the New York Mercantile Exchange, WTI crude for July delivery fell 0.56% to $61.09 a barrel.

Overnight, crude futures rose sharply on Wednesday extending gains from one session earlier, amid a massive draw of U.S. stockpiles last week.

On the Intercontinental Exchange (ICE), Brent crude for July delivery rose 0.76 or 1.16% to 65.64 on Wednesday. Both WTI and brent futures surged by more than 3% on Tuesday, extending a volatile period for crude prices.

Crude futures moved higher on Wednesday after the Energy Information Administration (EIA) said crude stockpiles dwindled dramatically last week in its Weekly Petroleum Status Report.

For the week ending June 5, U.S. crude inventories dipped by 6.8 million to 470.6 million. The draw defied analysts' expectations of a 1.8 million rise. The decline is viewed as bullish for crude, which has seen its price fall by roughly 40% on a year-over-year basis, amid a glut of oversupply in global markets. The draw was spurred in part by strong demand among gasoline refineries, which increased its capacity to 94.6% on the week.

Production, meanwhile, increased modestly by 24,000 to 9.610 million bpd, up from 9.586 million bpd a week earlier. The production spike is regarded as a positive development for U.S. shale producers, as they look to regain market share.

Earlier in the spring, U.S. shale production was undercut by an OPEC strategy to depress prices by flooding global markets with a surplus of crude. In turn, U.S. shale production slowed as inventory levels nationwide neared full storage capacity. Last week, OPEC showed no signs of slowing output, as it kept its production ceiling unchanged above 30 million barrels per day for the second time in six months.

Elsewhere, the former head of the U.S. Defense Intelligence Agency told a House Foreign Affairs subcommittee on Iran's enduring ballistic missile threat that he believes the Persian Gulf nation has "every intention" of building a delivery system for a nuclear weapon.

The comments from retired Army Lt. Gen Michael Flynn come several weeks before Iran's deadline on June 30 to reach a final agreement with Western powers on a nuclear deal. The two sides agreed on the framework of an initial deal in April.

Iran's oil minister told OPEC last Friday that his nation has the capability to double oil exports within a period of six months if longstanding economic sanctions are lifted this summer. A comprehensive nuclear pact is viewed as bearish for crude, as an outflow of Iranian crude could further complicate the supply-demand balance in energy markets.