Oil prices turned lower to erase the previous day’s gains, after weekly government data showed an unexpected build up in gasoline inventories and a lower than expected growth in demand.
Light sweet crude for July delivery most recently fell by 92 cents or 1.53% to trade at $59.08 a barrel on the New York Mercantile exchange. The US most active contract was trading at an intraday high of $61.18 before the inventory data was released.
Brent for August delivery, the new front month contract, traded 82 cents or 1.32% lower at $62.86 a barrel on the London based ICE futures exchange.
The Energy Information Administration reported on Wednesday that reported that US gasoline inventories rose unexpectedly and crude supplies at a key delivery point increased to fuel speculation that the decline in inventories was coming to an end.
Stockpiles in Cushing, Oklahoma, a key storage and delivery point for the benchmark Nymex contract rose for the first time in seven weeks with the EIA also reporting a drop in refinery utilization.
“The decline in refinery utilization is also bearish for crude oil price, since any diminution in demand will cause the recent trend of crude oil inventory declines to reverse,” John Kilduff, partner at Again Capital LLC in New York, told Reuters.
While crude inventories in the US fell by 2.7 million barrels for the week ending 13 June, topping the 1.2 million barrel consensus forecast by analysts polled by the Wall Street Journal, it failed to lift market sentiment after the EIA also reported gasoline demand fell by an unexpected 424,000 barrels.
Also weighing down the prices were concerns about the lack of progress between Greece and its international creditors over a possible bailout deal and the strengthening of the dollars against a basket of foreign currencies.
A stronger dollar is bearish for the demand of commodities denominated in dollars like oil as it makes them expensive to holders of foreign currencies.
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