Oil prices eased yesterday as the market awaited US inventory data expected to show fuel inventories had grown for the tenth week in a row.
US light sweet crude for September delivery fell 39 cents to $58.61 a barrel, while London Brent crude shed 32 cents to $57.54.
Prices hit a record of $62.10 for US crude on June 7, but have since come under pressure from swelling stocks and downward revisions to oil demand forecasts. Some analysts remain bullish.
"The short-term fundamentals are still not that strong but in the medium to long term it looks like there could be tightness because there is no slack in the system," said Tony Nunan, a manager at Mitsubishi Corporation's international energy business in Tokyo.
The next set of US inventory data, to be released todayis expected to show a
1.7 million barrel increase in stocks of distillates, which include heating oil and diesel.
If confirmed, it would be the tenth weekly increase in a row and would further ease concern that the high-demand fuel stocks could run short ahead of peak consumption in the fourth quarter.
A Reuters survey of analysts also forecast a 900,000-barrel fall in gasoline stocks in line with high summer demand and a
1.9 million barrel fall in overall crude inventories.
Crude stocks have been eroded by storm disruption to imports and the market remains concerned about possible future problems following the busiest start to the Atlantic hurricane season on record.
In the longer term, the market could draw strength from worries new supplies might not be developed quickly enough.
Iranian Oil Minister Bijan Zanganeh said yesterday that the nation's crude output capacity was depleting by up to 400,000 barrels per day each year, showing the need to overcome objections from the country's new conservative government to foreign investment. "Our fields are depleting by between 300,000 and 400,000 barrels a day each year," Mr Zanganeh said.
"With heavy investment, there is capacity for one million barrels per day (bpd) to come from unfinished projects," he added.
In the near term, he said the market was adequately supplied and had no need for an additional 500,000 barrels per day increase in OPEC output.
Last month, the Organisation of the Petroleum Exporting Countries raised formal quota limited by 500,000 bpd to 28 million bpd. It also authorised cartel President Sheikh Ahmad al-Sabah to consult on another 500,000 bpd increase should prices stay high.