Aug. 22 (Bloomberg) -- West Texas Intermediate crude capped a fifth weekly decline, the longest losing streak in nine months, on concern refineries will reduce demand for crude as the end of summer driving season approaches.
Gasoline demand slid to a two-month low, according to the latest weekly report from the Energy Information Administration. Retail gasoline prices are at the lowest seasonal level in four years, AAA data show. U.S. refineries typically schedule seasonal maintenance for September and October, when they move from maximizing gasoline output to producing winter fuels.
“WTI is weakening because we are approaching refinery turnaround season,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “Refinery runs aren’t going to go up much further.”
WTI for October delivery dropped 31 cents, or 0.3 percent, to $93.65 a barrel on the New York Mercantile Exchange, the lowest settlement since Jan. 14. The volume of all futures traded was about 25 percent below the 100-day average. Front-month prices decreased 3.8 percent this week.
Brent for October settlement slipped 34 cents to $102.29 a barrel on the London-based ICE Futures Europe exchange. Volume was 36 percent below the 100-day average. The European benchmark’s premium over WTI widened to $8.64.
Gasoline delivery, a measure of demand, slipped to 8.78 million barrels a day last week, the lowest level since June, the EIA said on Aug. 20. The peak driving season typically runs through Labor Day, which falls on Sept. 1 this year.
“The focus is definitely on the U.S. and on concern about demand as we head into the maintenance season,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “Everybody is wondering if demand will stay steady. People are reducing risk exposure now.”
Gasoline futures dropped 0.3 percent to $2.7384 a gallon on the Nymex. The average price of regular gasoline at the pump was $3.437 yesterday, the lowest level for this time of year since 2010, according to AAA. An increase in road trips over the Labor Day weekend is unlikely to reverse the decline in prices, according to AAA.
Prices briefly pared losses after Federal Reserve Chair Janet Yellen said slack remains in the U.S. labor market even after gains made during the five years of economic recovery.
Yellen has said the central bank has no “mechanical answer” for when to raise rates, and that before doing so policy makers must be certain the economy is on a solid footing.
“Yellen’s comments on the labor market conditions bode well for the economy and energy demand,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “There is a bit of bullish narrative emerging here.”
The Bloomberg dollar index rose as far as 1,030.22, the highest level since February. A strong dollar reduces oil’s investment appeal.
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