Crude oil futures up in early Asian trade after big losses

The IEA, which mostly kept forecasts for supply and demand unchanged, said that while the re-balancing of global oil markets is progressing, record-high inventories remain "a threat to the recent stability of oil prices".

The IEA reported that OPEC's crude oil production rose by 400,000 bpd (barrels per day) in June 2016 to 33.2 MMbpd (million barrels per day).

It notes that later in the year "we may well see crude oil stocks fall back but there is a risk that, unless demand turns out to be stronger than we now anticipate, products stocks could rise still further and threaten the whole price structure".

The US government's EIA said crude inventories fell 2.5 million barrels last week, less than a 3 million-barrel drop forecast in a Reuters poll.

The API also cited an unexpected rise of 1.5 million barrels in gasoline and 2.6 million in distillates, that include diesel, for the week to July 8.

The projected drop for the current year "looks unavoidable" for Venezuela as foreign oil service providers limited operations in the country with worldwide contractors facing delayed payments as well as "daily operational challenges", the IEA says.

The U.S. refiners' demand for oil typically starts falling after July and many refineries begin undergoing maintenance to prepare for the seasonal switch to churn out cheaper winter-grade gasoline.

Experts worry that worldwide oil markets will remain stagnant due to an elevated level of oil but waning demand from buyers to purchase shares.

That data strengthened fears that the glut of crude oil that sent prices plunging in 2014 and 2015 has turned into a glut of refined fuels.

Brent for September settlement dropped $2.21, or 4.6 percent, to $46.26 a barrel on the London-based ICE Futures Europe exchange.

The above graph shows the price performance of crude oil futures relative to key moving averages. Indeed, Riyadh told OPEC it raised its output in June to within a whisker of a record high reached a year ago. The IEA noted that commercial inventories rose by 13.5 million barrels in May to close the month at a record global total of 3.07 billion barrels.

The accumulation of stockpiles shows that even as excess oil production is fading and global markets are re-balancing, the recovery process will be a bumpy ride. The IEA, which advises industrialized nations on energy policies, said crude stockpiles kept rising last month, pushing floating storage to the highest level in seven years.

"Crude supplies are down a little, but it doesn't change the overall picture", Finlon said.

"The market had moved up to $50 quite fast, so we might go down and see whether there is anything below $40".

Drama, comedy series Emmy nominations announced
Rio's shuttered Olympic anti-doping lab awaits WADA approval