Oil Prices Down 2% on Inventory Data
NEW YORK: Oil prices fell about 2 percent on Wednesday as data showing large weekly builds in US petroleum products offset a surprise draw in crude stockpiles, pressuring prices to their second daily loss.
US inventories of distillates, which include diesel and heating oil, rose by 4.6 million barrels in the week to Sept. 9, the US Energy Information Administration reported. Analysts had expected an increase of 1.5 million barrels. It was the biggest weekly build since January, putting distillates at six-year seasonal highs.
The EIA also reported that crude inventories fell 559,000 barrels during the latest week. Analysts had expected a build of 3.8 million barrels.
Gasoline stockpiles also rose more than expected, gaining by 567,000 barrels versus a forecast build of 343,000.
“A build to gasoline stocks amid lower runs and lower product supplies counters the bullish theme, as does a strong build to distillates,” said Matthew Smith, analyst at New York-based crude cargo tracker Clipperdata.
Brent crude futures were down 90 cents, or 1.9 percent, at $46.20 per barrel by 11:54 a.m. EDT (1554 GMT).
US West Texas Intermediate (WTI) crude futures slid 95 cents, or 2.1 percent, to $43.95.
Both Brent and WTI rose briefly after the EIA reported the latest crude drawdown, which followed the previous week’s surprise decline of 14.5 million barrels. That earlier draw, the most for a week since 1999, was due to Tropical Storm Hermine delaying oil arrivals into the US Gulf Coast for several days.
“So, the million-dollar question is really a 14.5 million barrel question … as in where did all those barrels go to? The market was expecting some sort of a ‘make up call’ after last week’s storm affected mega-draw,” said David Thompson, executive vice president at commodities-focused broker Powerhouse in Washington.
Some said the next EIA data could shed light on that. “Next week’s report will be telling, whether last week’s lost barrels finally show up in the petroleum balance sheet,” said John Kilduff, partner at New York energy hedge fund Again Capital.
Gasoline and distillate futures fell more than 2 percent each. Distillates also hit a two-week low as investors worried whether the coming autumn will be cold enough to boost heating oil demand adequately.
“The big rise in distillate inventories should weigh, as the category assumes the mantle of seasonal leadership,” Kilduff added.
On Tuesday, crude futures settled down 3 percent after the world’s energy watchdog and OPEC both revised forecasts that signaled the global crude glut could persist much longer than expected.