Oil prices drop before US supply report

Oil prices dropped on Wednesday as dealers awaited the release of a US stockpiles report for clues about demand in the world's top crude consumer. Brent North Sea crude for delivery in August dropped 57 cents to stand at $111.72 a barrel in London midday deals. US benchmark West Texas Intermediate for August slipped 33 cents to $105.01 a barrel compared with Tuesday's close. The market's focus is the US Energy Information Administration's weekly report on US commercial energy inventories to be released later on Wednesday, analysts said. Crude reserves are expected to have fallen 1.7 million barrels in the week ended June 27, according to analysts polled by the Wall Street Journal. Gasoline stockpiles likely rose by 200,000 barrels, and stocks of distillates, which include heating oil and diesel, are expected to have climbed 800,000 barrels. Despite Wednesday's losses, Singapore's United Overseas Bank (UOB) said oil prices retained support ‘on upbeat manufacturing data in China’. Chinese manufacturing activity expanded at its fastest pace this year in June, an official survey showed on Tuesday, in a sign that Beijing's attempts to tackle slowing growth in the world's number two economy and top energy consumer are gaining traction. UOB said concerns are easing over a possible supply disruption in major crude producer Iraq, according to AFP.