Oil prices ended lower after a big drawdown in US crude inventories was offset by an unexpected large growth in gasoline and distillate stockpiles on the restarting of a key refinery and a growth in supplies from the US.
Light sweet crude for October delivery ended 71cents or 1.8% lower at $38.60 a barrel on the New York Mercantile Exchange. The contract traded as high as $39.86 a barrel immediately after the weekly crude report.
Brent for October delivery, the global benchmark, ended 7 cents or 0.2% lower at $43.14 a barrel on the London Based ICE Futures Exchange.
“It’s been a good driving season here in the U.S., but it hasn’t really been enough to bring inventories back down to average levels,” Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, which oversees $127 billion, told the Wall Street Journal.
“That supply overhang doesn’t seem like it’s going to go away very quickly.”
According to the Energy Information Administration’s weekly report on crude inventories, crude inventories in the US fell by 5.5 million barrels in the week ending 21, the biggest weekly drawdown since early June.
This was bigger than the consensus estimate of a Reuters poll which predicted a 1 million barrel draw fro the same period.
Market sentiment was however dampened by reports that gasoline stockpiles grew by 1.5 million barrels against a consensus forecast of 1 million barrels while distillates grew by 1.4 million barrels against a consensus estimate of 1 million barrels.
“Plummeting gasoline seems to be a drag on crude oil prices,” Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt, Germany, told CNBC.
“This is due to rising gasoline stocks, despite sharply lower gasoline production,” Fritsch added.
The report saw gasoline futures settle nearly 65 lower on the day on the New York Mercantile Exchange with September gasoline ending 8.4 cents lower at $1.381 a gallon.
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