Oil prices ease back after industry group reports surprise rise in US crude stockpiles

Oil prices spike higher on report Saudis will make deeper cuts to crude exports

Oil prices pulled back slightly after the close of Tuesday's trading session as an industry group reported a surprise rise in U.S. crude stockpiles.

Crude inventories rose by 1.6 million barrels in the week to July 14 to 497.2 million, the American Petroleum Institute said, compared with analysts' expectations for a decrease of 3.2 million barrels.

Gasoline stocks fell by 5.4 million barrels, compared with expectations in a Reuters poll for a 665,000-barrel decline.

The U.S. Energy Information Administration will release its report based on more comprehensive data on Wednesday at 10:30 a.m. ET.

U.S. West Texas Intermediate (WTI) crude futures were up 32 cents at $46.33 after ending Tuesday's session 38 cents higher at $46.40 per barrel. Brent crude futures, the international benchmark for oil prices, were up 36 cents at $48.78 per barrel by 4:42 p.m. ET (2042 GMT).

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"We're stuck in a range that ... will be tough to break out of without some kind of political factor coming into play," Matt Stanley, fuel broker at Freight Investor Services, said.

In a sign of strong demand, data on Monday showed refineries in China increased crude throughput in June to the second highest on record.

But many markets are well supplied and oil for prompt delivery is trading at heavy discounts to forward futures in several parts of the world. As a result, crude oil prices are trading at only around half the levels seen three years ago.

Oil prices briefly extended gains on reports that Saudi Arabia is considering further limiting the amount of crude it ships beyond its borders.

The Saudis are considering cutting crude oil exports by up to another 1 million barrels a day, the Financial Times reported, citing Bill Farren-Price, an oil consultant at Petroleum Policy Intelligence.

Reuters reported last week that Saudi Arabia will cut crude oil shipments to its customers in August by more than 600,000 barrels per day to balance the rise in domestic consumption during the summer, while staying within its OPEC production commitment.

Throughout more than six months of OPEC-led production cuts, exports have fallen more slowly than output, one factor that has prevented the cartel from shrinking global crude inventories to their stated target.

A deal by OPEC with Russia and other non-OPEC producers to cut supplies by around 1.8 million barrels per day (bpd) between January this year and March 2018 has so far failed to tighten the market or push up prices.

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Although many OPEC countries have restricted production, others including Nigeria and Libya have been allowed to increase output.

Ecuador, a small producer within OPEC, said on Tuesday it was not cutting its production by 26,000 bpd as agreed due to the country's fiscal deficit, which is expected to hit 7.5 percent of gross domestic product this year.

Oil Minister Carlos Perez said Ecuador was cutting only 60 percent of that figure, putting current output at 545,000 bpd.

"We are not meeting the quota imposed on us because of the obvious needs the country has," Perez said.

U.S. oil production is also rising steadily, helping soak up much of the market share vacated by OPEC members.

The U.S. Energy Department said in a report on Monday that U.S. shale oil output is likely to rise for the eighth consecutive month in August, climbing 112,000 bpd to 5.585 million bpd.

"With little sign of the OPEC-shale tug of war drawing to an end, the scene is now set for a period of range-bound trading as market players await the next price catalyst," said Stephen Brennock at London brokerage PVM Oil Associates.

— CNBC's Tom DiChristopher contributed to this report.