Crude oil fell for a second day in New York after U.S. gasoline inventories unexpectedly rose last week, signaling that economic recovery in the world’s biggest oil consumer may be stalling.
A U.S. Energy Department weekly report yesterday showed gasoline supplies climbed to the highest level in at least 20 years for the last week of July. More Americans than projected filed applications for unemployment insurance last week, indicating employers kept cutting staff.
“The market is vulnerable at best,” said Johannes Benigni, chief executive officer of consultants JBC Energy GmbH in Vienna. “A correction is to be expected if fundamentals lead the market. I don’t see oil prices above $85, it’s more likely we’ll stay in the $70 to $80 trading range.”
Crude oil for September delivery declined as much as 80 cents, or 1 percent, to $81.86 a barrel in electronic trading on the New York Mercantile Exchange, and was at $81.95 at 1:50 p.m. London time. Brent crude for September fell 66 cents, or 0.8 percent, to $81.54 a barrel on the London-based ICE Futures Europe exchange.
Yesterday, oil in New York fell 8 cents to settle at $82.47 after rising to $82.97, the highest intraday price since May 4. Futures have gained 14 percent in the past year.
Initial jobless claims climbed by 19,000 to 479,000 in the week ended July 31, the most since April and exceeding the highest estimate of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington
U.S. gasoline supplies increased 729,000 barrels, or 0.3 percent, to 223 million in the week ended July 30, the highest level since April 30, the Energy Department said. They were forecast to drop by 1 million barrels, based on the median estimate of 17 analysts in a Bloomberg survey. Inventories were the highest for the final week in July going back to 1990.
Gasoline for September delivery on Nymex fell as much as 0.4 percent to 216.55 cents a gallon.
Refinery utilization increased 0.6 percentage point to 91.2 percent in the week ended July 30.
“It seems that we are churning out products at pre- recession levels,” Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania, said in a note to clients. “Are consumers snapping them up at the same pace? Not by a long shot.”
U.S. crude supplies dropped 2.78 million barrels to 358 million, according to an Energy Department report. They jumped 7.31 million barrels in the week ended July 23, the biggest increase since March 19. Inventories were forecast to decline 1.65 million barrels in the Bloomberg survey.