Honolulu Star-Advertiser

Saturday, June 22, 2024 76° Today's Paper


Top News

Oil falls as U.S. reports surprise fuel build, weak demand

REUTERS/ADREES LATIF/FILE PHOTO
                                The Bryan Mound Strategic Petroleum Reserve, an oil storage facility, is seen in this aerial photograph over Freeport, Texas, in April 2020.
1/1
Swipe or click to see more

REUTERS/ADREES LATIF/FILE PHOTO

The Bryan Mound Strategic Petroleum Reserve, an oil storage facility, is seen in this aerial photograph over Freeport, Texas, in April 2020.

LONDON >> Oil prices fell again today, after the U.S. government reported weak fuel demand in the country and a surprise jump in gasoline and distillate fuel stockpiles.

Brent crude futures fell by $1.25, or 1.5%, to $82.35 a barrel by 11:50 am ET (1550 GMT). U.S. West Texas Intermediate crude futures were $1.15, or 1.5%, lower at $78.08 a barrel.

Both benchmarks were headed for monthly losses, with Brent futures on track for a decline of more than 6% from last month, while WTI was poised for a slide exceeding 4.5%.

U.S. crude stocks fell more than expected last week as refiners in the country ramped up to their highest utilization rates in over nine months, data from the U.S. Energy Information Administration showed. However, there was a surprise jump in gasoline and distillate fuel inventories as demand weakened even as output rose.

Crude stocks declined by 4.16 million barrels in the week ended May 24, EIA data showed. Gasoline and distillate stockpiles together were about 4.57 million barrels higher.

“Weakness in gasoline markets have continued to drag down the rest of the oil complex,” Alex Hodes, oil analyst at brokerage StoneX, wrote today.

Analysts had expected the U.S. Memorial Day holiday on May 27, the start of the U.S. summer driving season, would boost fuel demand. Yet EIA’s measure of gasoline demand slipped about 2% from the prior week to 9.15 million barrels per day.

“I was looking for a draw in gasoline, in particular, ahead of the holiday weekend but when refiners are cranking it out, that is too much to drain product inventories,” said John Kilduff, partner at Again Capital.

“The gasoline demand is still a good number, even though I would have expected that to be up closer to 9.5 (million bpd) going into the last holiday weekend,” he said.

Further pressuring oil prices, investors’ risk-appetite has been subdued by the prospect of delayed monetary easing in the U.S. and Europe, analysts at financial brokerage ActivTrades said. “Fear trading” is dominating financial markets ahead of Friday’s U.S. consumer price index data, they wrote to clients.

Oil investors are also cautious ahead of an OPEC+ meeting this weekend. The producer group will decide whether to extend, deepen or unwind supply cuts.

Soft fuel demand and rising global oil inventories may help convince OPEC+ producers, which include the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, to maintain supply cuts when they meet on June 2, OPEC+ delegates and analysts say.

By participating in online discussions you acknowledge that you have agreed to the Terms of Service. An insightful discussion of ideas and viewpoints is encouraged, but comments must be civil and in good taste, with no personal attacks. If your comments are inappropriate, you may be banned from posting. Report comments if you believe they do not follow our guidelines. Having trouble with comments? Learn more here.