By MARK SHENK
West Texas Intermediate crude fell for the sixth time in
seven days and Brent dropped to a four-month low on
speculation that refineries will slow operations, easing
Refineries probably operated at 92.8% of capacity on Aug. 1,
down 0.7 percentage point from the prior week, according to a
survey before a government report
Wednesday. US refiners usually schedule maintenance
for September and
October when gasoline demand declines. Brent also fell as
Libya said that the Es Sider oil port, the countrys
biggest, is in talks to resume exports.
activity has already
peaked for the year and should continue to fall, said
Stephen Schork, president of Schork Group Inc. in Villanova,
Pennsylvania. There are just four weeks remaining to
the peak-demand summer driving season, so theres not a
lot to support prices.
WTI for September delivery dropped $1.06, or 1.1%, to
$97.23/bbl at 1:05 p.m. on the New York Mercantile Exchange.
Futures touched $97.09 on Aug. 1, the lowest intraday level
since Feb. 5. The volume of all futures traded was 5.8% below
the 100-day average.
Brent for September settlement slipped 96 cents, or 0.9%, to
$104.45/bbl on the London-based ICE Futures Europe
exchange. The contract
touched $104.07, the lowest level since April 2. Volumes were
24% higher than the 100-day average. The Europe
an benchmark crude traded at
a $7.22 premium to WTI, versus $7.12 earlier in the week.
The announcement July 31 that a Coffeyville, Kansas, refinery
that gets oil from
Cushing, Oklahoma may be offline for most of August sent WTI
to a four-month low. The 115,000-bpd plant may remain idle
for four weeks after a July 29 fire, CVR Refining
CEO Jack Lipinski said.
Cushing supplies fell to 17.9 million in the week ended July
25, the least since October 2008, according to an Energy
Information Administration report on July 30. Stockpiles have
dropped from a peak of 41.8 million this year as new
pipelines have sent oil to the Gulf Coast, home to about half
of US refining
Were all anxious about tomorrows
data, said Bob Yawger, director of the futures division
at Mizuho Securities in New York. WTI has been
supported by the fall in Cushing supplies this year.
Coffeyville being offline may change the whole formula and we
may see a supply gain.
US crude inventories probably fell 1.5 million bbl to 365.9
million last week, according to the median of nine analyst
responses in the Bloomberg survey before the EIA report. They
also forecast that gasoline supplies fell and distillates
Gasoline for September delivery dropped 1.69 cents, or 0.6%,
to $2.708/gal on the Nymex. Futures touched $2.6983, the
lowest level since Feb. 7. Pump prices slipped 1 cent to
$3.49/gal nationwide on Monday, the lowest since March 11,
according to AAA, the largest US motoring group.
Ultra-low-sulfur diesel for September delivery declined 2.88
cents, or 1%, to $2.8424/gal. The 52-week low is $2.8258,
reached July 15.
US gasoline consumption peaks during the summer driving
season from late May to early September.
Were seeing considerable seasonal weakness in
gasoline, said Tim Evans, an energy analyst at Citi
Futures Perspective in New York. The price action
reflects the step down to a lower demand level in
The American Petroleum Institute is scheduled to release
separate supply data. The industry-funded group in Washington
collects data on a voluntary basis from operators of
refineries, bulk terminals and pipelines. The government
requires that reports be filed with the EIA.
Elsewhere, Tripoli, Libyas capital, has plunged into
chaos amid more than two weeks of fighting over control of
the international airport by rival militias.
Kurdish fighters recaptured Sinjar and Rabiaah after
heavy fighting Monday, the Kurdistan Democratic Party said.
At least 50 Islamic State militants were killed in the battle
for Wana south of Mosul dam.
WTI climbed to a nine-month high in June after militants from
a breakaway al-Qaeda group known as Islamic State captured
the city of Mosul. Futures dropped when the rebel advance
stalled, sparing the countrys south, home to more than
three-quarters of its oil output.
Prices climbed to a new high right after the Iraqi
headlines in June but have been falling ever since,
Schork said. Once it became clear that supply was
continuing to flow, the urgency left the market. The bulls
better make a stand or we will soon be testing $95.
Ukraine expressed alarm about a new buildup of Russian forces
on its border, intensifying a conflict the United Nations
agency for refugees says has displaced hundreds of thousands.
Futures surged when Russia annexed Crimea from Ukraine in
Theres not been an outbreak of peace in Libya,
Iraq or Ukraine, Evans said. Weve seen a
massive change in market sentiment and trade flows but no
change in fundamentals. An intensification of violence in any
of these places could easily send prices higher again.