US oil settles down 57 cents, or 0.95%, at $59.70 a barrel

Andrew Cullen | Reuters

Crude oil slipped for a second straight day on Thursday, weighed by weaker U.S. refined fuels markets and potential negative impact from Greece's debt crisis on European energy demand.

U.S. crude for delivery in August closed down 57 cents, or 0.95, at $59.70 a barrel. It closed down more than 1 percent on Wednesday. Brent for August delivery was down 30 cents at $63 a barrel, after ending the previous day down 96 cents, or 1.5 percent.

Worries of a possible glut emerging in U.S. gasoline and diesel supply after large builds in both last week added to concerns that millions of barrels of Nigerian crude were floating around the Atlantic Basin looking for buyers.

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Volumes were relatively light, with Brent's front-month registering under 180,000 barrels and U.S. crude below 165,000.

"I'm really looking for a breakout of the recent trading ranges to take new positions," said Tariq Zahir, an oil bear at Tyche Capital Advisors, an energy-focused fund in Laurel Hollow, New York.

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Brent has been trapped in a $62 to $65 range over the past two weeks while U.S. crude has stayed within $59 to $61.

Gasoline and ultra-low sulfur diesel (ULSD) futures were down about 1 percent.

Refined products have dictated much of the recent trend in crude prices as focus has turned towards the demand for motoring fuels during the U.S. summer driving season.

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On Wednesday, the U.S. Energy Information Administration said gasoline stockpiles rose 680,000 barrels, more than twice the amount forecast by analysts in a Reuters poll.

Inventories of distillates, which include diesel and heating oil, jumped 1.8 million barrels, more than an expected build of 1 million.

"We may have overproduced products in recent weeks," said Scott Shelton, an ICAP oils broker in Durham, North Carolina. "Stock trends in ULSD are getting pretty negative."

In Athens, to-the-wire talks between Greece and its international creditors failed to yield an agreement so far, raising concerns about the impact of a potential debt default by the country on larger Europe and the region's oil demand.

"All eyes are on Greece," said PVM oil analyst Tamas Varga, adding that for oil, "the risk at the moment is on the downside."

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Traders and investors were also eyeing progress toward a June 30 deadline for an Iran nuclear accord that would be key to lifting Western sanctions on Tehran's oil exports.

"The prospect of another 1 million barrels per day increase in supply from Iran ... could easily drag prices below $60 again," London-based Capital Economics said in a report.