Crude prices edge lower despite U.S. inventory drawdown

Crude prices tilted lower in American trade even as the dollar index gave up ground, following earlier data from the U.S., the world's largest economy, and as markets await the Federal Reserve's meeting minutes later today, and OPEC's meeting in Vienna tomorrow. 

As of 04:47 GMT, U.S. crude futures due on July 15 fell 0.19% to $51.37 a barrel from the opening of $51.47, while Brent crude futures due on July 15 gave up 0.15% to $54.07 a barrel from the opening of $54.17, as the dollar index inched down 0.04% to 97.31 from the opening of 97.35. 

Earlier U.S. data showed a steeper-than-expected drop in existing home sales last month, while the Energy Information Administration released its report on U.S. crude inventories, showing a widened deficit of 4.4 million barrels in the week ending May 19, adding to a 1.8M deficit in the previous reading, while analysts expected a 2.4M drop.

Total cryde stocks fell to 516.3 million barrels, remaining within the upward range in the medium term in this time of the year, and near 80-year highs, while gasoline stocks fell 0.8 million barrels but remains within a similar upward range, as distillate stocks, including heating fuel, fell 0.5 million barrels. 

Markets await the Federal Reserve's minutes for the last meeting as investors look for confirm whether the Fed will tighten the policy in the June meeting, in addition to further details about the Federal Reserve's efforts to cut its $4.5 trillion balance sheet in the next few years.

Investors also look forward to global producers, including OPEC and Russia, to formally agree on extending the 1.8 million bpd output cuts for nine more months until March 2018 in an attempt to achieve balance and curtail global crude inventories, which are at five-year highs currently.

U.S. president Donald Trump proposed his first budget plan, aiming to cut government spending by $3.6 trillion and balance the budget in the next decade, while proposing to sell half the country's strategic crude reserves, estimated at 687.7 million barrels, in specific locations in Texas and Louisiana.

Trump aims to sell 270 million barrels of the U.S. oil reserves in the next decade, which would provide $500 million in the next 2018 financial year, and $16.6 billion in the next decade, while BP started its Quad 204 project in the Northern sea in Britain, expected to produce nearly 130 thousand bpd. 

Similarly, Iran's National Oil Company announced a plan to increase Iranian crude production by 8% by March, 2018, while production will resume from a currently-disabled oil field in Libya by next month, paving the road for possible sharp corrections on prices after the recent gains.