Oil slides ahead of US inventories

Crude oil prices dropped by more than $1 a barrel on Wednesday ahead of the latest US weekly inventories data while base metals moved lower and gold dipped as a recovery in the dollar and weakness in Asian stock markets weighed on sentiment towards commodities.

Nymex September West Texas Intermediate fell $1.65 to $65.58 a barrel, while ICE September Brent retreated $1.24 to $68.64 a barrel.

US inventories data due out later in the session was expected to show a fall of 1.3m barrels in crude stocks last week, according to a poll of analysts by Reuters. Demand from US refineries has been weak. Refinery utilisation was expected to decline 0.1 percentage points to 85.7 per cent after a larger-than-expected drop of 2.1 percentage points in the previous week.

Gasoline stocks were expected to rise 400,000 barrels but retail prices for petrol have fallen to an eight week low which could provide some support for demand. Nymex August RBOB unleaded gasoline fell almost 2 cents to $1.8915 a gallon.

US distillate demand has been extremely weak and stocks, which already stand at a near 25-year high, were expected to rise further with an increase of 1.3m barrels.

Nymex August heating oil dipped 1.1 cents to $1.7537 a gallon.