Oil Falls As U.S. Gasoline Supplies Rise by Most Since January

Brent for February settlement dropped 0.7% to $63.89 a barrel on the London-based ICE Futures Europe Exchange.

Sheela Tobben

12 Dec 2019, 04:46 AM IST

Oil Falls As U.S. Gasoline Supplies Rise by Most Since January

Petrol and diesel prices have been hiked for 15 days in a row, despite a decline in the rates of crude oil.

(Bloomberg) -- Oil fell to the lowest level in nearly a week as U.S. crude and fuel inventories increased.

Futures in New York declined 0.8% Wednesday. American gasoline supplies jumped the most since January last week as demand hit a three-year low, according to the the Energy Information Administration. Crude stockpiles rose by 822,000 barrels.

“The build in products was really fast, and it was a pretty big build,” said Bill O’Grady, chief market strategist at Confluence Investment Management LLC in St. Louis. “This is the holiday season, so you do get some driving. This build means the economy is not as strong as it looks.”

The gasoline build topped estimates by the industry-funded American Petroleum Institute, with every part of the country seeing an inventory boost. The fifth weekly gain in supply has now pushed fuel inventories to seasonally the highest in five years. The EIA also reported a 5.4 million-barrel increase in Gulf Coast crude supplies, a signal that refiners there are consuming less than usual.

West Texas Intermediate for January delivery settled 48 cents lower to $58.76 a barrel on the New York Mercantile Exchange. The contract ended Tuesday at $59.24, the highest settlement since Sept. 17.

Brent for February settlement fell 62 cents to close at $63.72 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $5.07 premium to WTI for the same month.

Crude had been hovering around the highest levels since mid-September after the Organization of Petroleum Exporting Countries and its allies surprised the market on Friday by announcing deeper-than-forecast production cuts for next year. A report from the group on Wednesday showed that it will have to implement the agreed curbs in full -- including compliance from laggards like Iraq and Nigeria -- to balance markets in early 2020.

“After a big run on the OPEC news last week, which was positive, I am not quite surprised to see lower prices on the back of EIA data,” said Rebecca Babin, senior equity trader at CIBC Private Wealth Management. “The market is in consolidation after the OPEC-led rally.“

Other oil-market news:
Gasoline futures settled 1.6% lower at $1.6261 a gallon. Saudi Aramco shares surged after the initial public offering, valuing the oil producer at a record $1.88 trillion. Trafigura Group Ltd. posted record oil and metals trading results as it benefited from volatile energy prices, but a bevy of asset impairments and writedowns cut profit to the lowest in nine years. While OPEC ministers secured a pledge last week from Russia to make deeper cuts to its oil output, the group’s analysts expect the nation to continue increasing its production next year.

Other oil-market news:

Gasoline futures settled 1.6% lower at $1.6261 a gallon.
Saudi Aramco shares surged after the initial public offering, valuing the oil producer at a record $1.88 trillion.
Trafigura Group Ltd. posted record oil and metals trading results as it benefited from volatile energy prices, but a bevy of asset impairments and writedowns cut profit to the lowest in nine years.
While OPEC ministers secured a pledge last week from Russia to make deeper cuts to its oil output, the group’s analysts expect the nation to continue increasing its production next year.

To contact the reporter on this story: Sheela Tobben in New York at vtobben@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick, Mike Jeffers