Oil prices fell Tuesday amid expectations that U.S. fuel inventory data will again show a rise in crude and gasoline stocks.
A decision by Nigerian unions to call off a strike and an announcement by Royal Dutch Shell that it would resume crude exports next month from the Forcados terminal -- shut down more than a year ago due to militant attacks -- also put pressure on prices.
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Light, sweet crude for August delivery on the New York Mercantile Exchange fell 49 cents to $68.69 a barrel by afternoon in Europe.
Brent crude for August delivery fell 47 cents to $70.75 a barrel on the ICE Futures exchange in London.
U.S. stockpiles of gasoline are expected to have risen 1.1 million barrels in the week ended June 22, according to 10 analysts surveyed by Dow Jones Newswires ahead of the U.S. Department of Energy's petroleum supply report on Wednesday.
The analysts also predicted the report will show refinery utilization increased 0.8 percentage points last week to 88.4 percent of capacity.
Despite the expected increases in supplies and refinery rates, there are lingering concerns the refining industry will not be able to produce enough gasoline to meet U.S. summer driving demand, which peaks between the July 4 holiday and Labor Day in early September.
Phil Flynn, an analyst at Alaron Trading Corp. in Chicago, said "0.8 and 1.1 are both dismal numbers."
"(Refiners) have a long way to go to make up for all the supplies they lost earlier in the year," he said.
Analysts have said refineries should be running at 94-95 percent of capacity at this time of year. Vienna's PVM Oil Associates said it expected "more refineries ... to return from maintenance in July, which should increase the U.S. operating capacity by about 800,000 barrels in the next few weeks."
Crude stocks are expected to have risen by 1 million barrels last week. Distillate stocks, which include heating oil and diesel fuel, are forecast to have increased by 200,000 barrels last week, the Dow Jones Newswires survey showed.
The president of the Organization of Petroleum Exporting Countries, Mohammed al-Hamli, said Tuesday that swelling oil inventories in the U.S. meant there was no need for the group to meet before its Sept. 11 policy talks to discuss injecting additional supplies into the market.
Heating oil futures for July fell by more than 2 cents to $2.0221 a gallon and natural gas prices edged upward to $6.946 per 1,000 cubic feet.
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