- Crude inventories rose 1.06 million barrels last week: EIA
- Refiners’ demand for crude fell 255,000 barrels a day
Oil declined after a government report showed U.S. crude inventories increased on weakening demand from refineries.
Crude inventories rose 1.06 million barrels, according to an Energy Information Administration report. Analysts surveyed by Bloomberg had forecast a 1.5 million-barrel decline. Refineries used 255,000 barrels a day less crude than a week earlier. Oil production and imports declined.
"Refineries are cutting back on crude runs and as a result inventories are rising again," said Craig Bethune, a fund manager at Manulife Asset Management Ltd. in Toronto who focuses on energy and natural resources investments. "Refiners are doing what they have to do because gasoline and diesel supplies are so high. They’ll soon be performing seasonal maintenance, which will cut runs further."
West Texas Intermediate for September delivery dropped $1.06, or 2.5 percent, to $41.71 a barrel at the close of trading on the New York Mercantile Exchange. Total volume traded was 25 percent above the 100-day average.
Brent for October settlement slipped 93 cents, or 2.1 percent, to $44.05 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $1.59 premium to WTI for October delivery.
U.S. crude stockpiles rose to 523.6 million, leaving supplies at the highest seasonal level in decades, the EIA report showed. Inventories at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, rose by 1.16 million.
Crude imports into the U.S. dropped 334,000 barrels a day to 8.4 million. Arrivals the prior week were at the highest level since October 2012. Crude production fell by 15,000 barrels a day to 8.45 million.
Refineries reduced operating rates by 1.1 percentage points to 92.2 percent of capacity. Plants usually begin to ratchet back operations in August as the peak-demand driving season approaches its end. Over the past five years, refiners’ thirst for oil has dropped an average of 1.2 million barrels a day from July to October.
Gasoline supplies dropped to 235.4 million last week. Production grew 1.1 percent to 10.1 million barrels a day. U.S. consumption of the fuel averaged 9.78 million barrels a day in the four weeks ended Aug. 5, little changed from the prior period and the highest seasonal level in at least a decade.
Saudi Arabia pumped a record 10.67 million barrels of oil a day in July, according to a report from the Organization of Petroleum Exporting Countries. The major exporter joins Russia and Iran in boosting shipments to big markets such as India and China.
- OPEC predicted that weakness in global oil markets could persist as demand slows seasonally and fuel inventories remain abundant.
- Venezuelan President Nicolas Maduro said he spoke to Saudi Arabia’s king about boosting oil prices.
- Iran expects foreign oil companies to sign deals valued at $25 billion over the next one to two years under the terms of a new contract model approved last week, the managing director of the National Iranian Oil Co. said.