Oil prices fell to multi-month lows on worries over a build in Gasoline supplies in the US even as the summer, the US’ traditional driving season, approaches the end.
Light sweet crude for September delivery fell 59 cents or 1.4% to end at $54.14 a barrel on the New York Mercantile Exchange. Based on the most active contracts, this is the lowest it has closed since March 9.
Brent futures, the global benchmark, ended 40 cents or 0.8% lower at $49.59 a barrel on the London based ICE Futures Exchange.
According to the weekly inventory report on Wednesday by the Energy Information Administration, crude inventories in the US fell by 4.4 million barrels last week; well above analysts’ expectations of a 1.5 million barrel draw.
The total crude inventories at 455.3 million barrels, however, remain at the highest levels for this time of the year in more than 80 years.
“The overarching theme in the oil market … is the status of U.S. oil supply and whether or not we’ll be facing an imminent decline and the latest weekly data hasn’t brought any comfort relative to those kind of expectations,” BNP Paribas oil analyst Harry Tchilinguirian told CNBC.
According to the data the fall in crude inventories was offset by an unexpected build in gasoline inventories by more than 800, 000 for the same period.
Crude distillates including heating oil and diesel also recorded growth in inventories building up by about 700,000 barrels.
“The resulting lower refining margins will decrease the incentive for crude oil processing, leading eventually to a renewed rise in crude oil stocks from an already lofty level,” Carsten Fritsch, senior commodity analyst at Frankfurt-based Commerzbank AG, told the Reuters Global Oil Forum.
The growth in gasoline and crude inventories increased concern over the demand with the traditional driving season nearing its end.
Concerns over demand were exacerbated by a report by the Organization of Petroleum Exporting Countries showing that production remained strong.
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