LONDON (Dow Jones)--Oil futures were lower Wednesday ahead of the release of the U.S. Department of Energy's report on oil inventories and on worries about the sustainability of the global economic recovery. At 1107 GMT, the August Brent contract on London's ICE futures exchange was $1.29, or 1.1%, lower at $118.06 a barrel. The front-month July contract on the New York Mercantile Exchange was trading down 45 cents, or 0.5%, at $98.92 per barrel. Analysts said the DOE's report on oil stocks, due at 1430 GMT, could provide support for oil prices, especially if they confirm the American Petroleum Institute's data released late Tuesday. "Numbers in line with yesterday's API report are expected to be perceived as slightly bullish," says Filip Petersson, strategist at SEB Commodity Research, in a research note. Industry body the API Tuesday reported a 3 million barrel drop in U.S. oil supplies for the week ending June 10, with gasoline stocks up 1.1 million barrels and distillate stocks down 400,000 barrels. In the DOE report, analysts polled by Dow Jones Newswires expect crude stocks to fall 500,000 barrels last week, while gasoline and distillates inventories are seen rising 400,000 barrels and 900,000 barrels respectively. But Christophe Barret, global oil analyst at Credit Agricole, said the drop in U.S. oil stocks reported by the API was "nothing special," as it only reflected temporary supply disruptions due to the closure of TransCanada's Keystone pipeline, which has since reopened. He said "a healthy correction" in oil prices is taking place and that trend is expected to continue in the coming days. Market participants will also be looking at macroeconomic data such as U.S. industrial production and the Consumer Price Index, due out later Wednesday, for signs of economic recovery. "The development today [in oil prices] is likely to be decided by the outcome of U.S. and possibly European statistics," says Petersson. However, macro-economic data have so far been mixed, providing a confusing picture for investors. Industrial production in the 17 countries that use the euro unexpectedly rose in April, despite economic problems in Greece and Portugal. But the U.K.'s benchmark index, FTSE 100, fell 0.3%, following a report that the number of people claiming unemployment benefit in the U.K. had risen. Fundamental are also pulling the market in two different direction. Saudi Arabia's pledge to increase oil production is pressuring WTI crude lower, while reduced supplies from the North Sea and the absence of Libyan oil exports is pushing up Brent. The difference between the two futures contracts narrowed slightly Wednesday from a record high of $22.78 Tuesday. Analysts said they expect the spread to continue narrowing as the July Brent contract expires today. The ICE's gasoil contract for July delivery was down $12.75, or 1.3%, at $979.25 per metric ton, while Nymex gasoline for July delivery was 297 points, or 1%, lower at $3.0349 per gallon. -By Konstantin Rozhnov, Dow Jones Newswires; +44 207 842 9376; konstantin.rozhnov@dowjones.com

Source