Oil Falls Amid Stockpile Glut as Investors Wait for StimulusBy
U.S. supply at highest seasonal level in at least decade: EIA
Dollar falls as ECB’s Draghi refrains from new asset purchases
Oil dropped as the U.S. is set to end the summer-driving season with ample stockpiles while investors await signs of additional central bank stimulus.
Futures fell 2.2 percent in New York. U.S. crude and gasoline supplies were at the highest seasonal level in at least a decade last week, an Energy Information Administration report showed on Wednesday. The dollar fell after European Central Bank President Mario Draghi signaled stimulus growth was on hold for now. Almost $5 trillion has been added to the value of world equities since June 27 amid signs central banks will boost the economy.
"A weaker dollar should be supportive but it’s not enough today because of uncertainty about the macro economy," said Michael Corcelli, chief investment office at Alexander Alternative Capital LLC, a Miami-based hedge fund. "The summer driving season will soon be coming to an end and we have plenty of gasoline on hand."
Oil has dropped about 13 percent since touching $51.67 a barrel on June 9 as Canadian supply returned after wildfires and the Brexit vote raised concerns about European economic strength. Saudi Arabian Oil Co., known as Saudi Aramco, is maintaining drilling activities and its sales to buyers in East Asia are rising, Chief Executive Officer Amin Nasser told reporters Wednesday.
West Texas Intermediate for September delivery dropped $1 to close at $44.75 a barrel on the New York Mercantile Exchange. Total volume traded was 35 percent below the 100-day average at 2:52 p.m.
Brent for September settlement declined 97 cents, or 2.1 percent, to $46.20 a barrel on the London-based ICE Futures Europe exchange. The global benchmark closed at a $1.45 premium to WTI.
Draghi indicated the ECB will consider adding fresh stimulus later this year when it has a clearer picture of the economic impact from the U.K.’s secession vote from the European Union. The Bank of Japan meets July 28-29 amid rising expectations for additional stimulus.
"We’re waiting to see what central banks, especially the Bank of Japan, have up their sleeve," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. "The inventory numbers yesterday were actually mildly supportive."
U.S. crude inventories fell by 2.34 million barrels last week to 519.5 million, according to the EIA report.
Stockpiles of gasoline rose for the fourth time in five weeks to 241 million last week, marking the highest level since April. U.S. consumption of the fuel averaged 9.73 million barrels a day in the four weeks ended July 15, down 0.1 percent from July 8 but still the highest seasonal level in at least a decade. American fuel demand typically peaks in the summer months when motorists take to the highways for vacations.
Gasoline futures for August delivery slipped 0.6 percent to $1.355 a gallon, the lowest close since March 4. U.S. pump prices averaged $2.186 a gallon as of Wednesday, according to AAA, the lowest seasonal level since 2004.
- Saudi Aramco is still working on plans for an initial public offering and is studying whether to list shares on an overseas stock exchange as well as in Saudi Arabia, Nasser told reporters Wednesday.
- Saudi Arabia overtook Russia as the biggest provider of oil to China in June, according to data from the General Administration of Customs.
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