By MARK SHENK
West Texas Intermediate crude dropped to a two-week low after
a government report showed that US gasoline supplies gained
as demand slipped.
Gasoline inventories climbed for a fourth week while
stockpiles of distillate fuel, a category that includes
diesel and heating oil, rose to a 10-month high, according to
the Energy Information Administration. Gasoline use fell 0.5%
to an average 8.95 million bpd in the past four weeks, the
least since May. WTI rose earlier after a Commerce Department
report showed the US economy rebounded more than forecast in
the second quarter.
Its amazing that gasoline inventories rose at all
given that were in the peak-demand season, said
Tom Finlon, Jupiter, Florida-based director of Energy
Analytics Group LLC. Gasoline is leading the way
WTI for September delivery slipped 70 cents, or 0.7%, to
close at $100.27/bbl on the New York Mercantile Exchange. It
was the lowest settlement since July 15. Prices, which are
down 4.8% so far in July, are heading for the biggest monthly
decline since October.
Gasoline for August delivery dropped 2.76 cents, or 1%, to
close at $2.8433/gal on the Nymex. Pump prices fell 0.2 cent
to $3.513/gal nationwide on July 29, the lowest since March
13, according to AAA, the largest US motoring group.
Ultra low sulfur diesel for August delivery declined 1.61
cents, or 0.6%, to settle at $2.8906.
Inventories of gasoline increased 365,000 bbl to 218.2
million, the highest level since March 14, the report showed.
Supplies were project
ed to rise by 1 million
bbl, according to the median of 10 analyst estimates in the
Bloomberg survey. Inventories in the area around New York
Harbor, the delivery point for gasoline futures, reached the
highest level for this time of year since 2008.
Distillate stockpiles rose 789,000 bbl to 126.7 million, the
most since the week ended Sept. 27.
Refineries operated at 93.5% of capacity, down 0.3 percentage
point from the prior week. Operating rates have peaked in
July during the past five years when gasoline demand climbs
as Americans take summer vacations. Refiners schedule maintenance
for September and
October as they transition to winter from summer fuels.
Crude stockpiles fell 3.7 million bbl to 367.4 million in the
week ended July 25, according to the EIA. A 1.25 million bbl
decline was project
ed by analysts surveyed by
Supplies at Cushing, Oklahoma, fell by 924,000 bbl to 17.9
million last week. The decline left stockpiles at the lowest
level since October 2008, according to the EIA, the Energy
Departments statistical unit.
Stockpiles have dropped at Cushing this year as new pipeline
capacity has been sending oil to Texas and Louisiana, the
states with the largest refining
along the Gulf Coast, known as PADD 3, rose 447,000 to 197.4
million last week, the EIA said.
If the Cushing draws continue, we will eventually reach
a point where storage is at minimum operational levels,
said Michael Lynch, president of Strategic Energy &
Economic Research in Winchester, Massachusetts. The
market doesnt seem concerned at the moment. The
reaction might be muted because a lot of the oil has simply
been moved to the Gulf.
US crude production fell 122,000 bpd to 8.443 million. Output
has surged this year as a combination of horizontal drilling
and hydraulic fracturing, or fracking, has unlocked supplies
trapped in shale formations, including the Bakken in North
Dakota and the Eagle Ford in Texas.
The market is struggling because the fuel demand
outlook is weak despite the strong economy, said John
Kilduff, a partner at Again Capital LLC, a New York-based
hedge fund that focuses on energy. The reality is that
gasoline consumption should drop further as the summer comes
to an end and we get into a quiet period for demand.
US gross domestic product rose at a 4% annualized rate after
shrinking 2.1% from January through March, Commerce
Department figures showed on July 30.
an Union agreed on July 29
to bar state-owned Russian banks from selling shares or bonds
, restricting the export of
equipment to modernize the oil industry and barring the sale
of equipment with military uses. The EU acted after
pro-Russian separatists continued to impede an investigation
into the July 17 downing of a Malaysian airliner by a
surface-to-air missile over eastern Ukraine.
Brent for September settlement fell $1.21, or 1.1%, to end
the session at $106.51/bbl on the London-based ICE Futures
Europe exchange. The Europe
an benchmark crude closed at
a $6.24 premium to WTI. The spread closed at $6.75 on July
29, the widest since July 4.