Oil futures continue down but supply concerns continue

Oil futures continue down but supply concerns continue

August contracts for West Texas Intermediate crude oil on the New York Mercantile Exchange closed down 74 cents to $56.72 per barrel on Wednesday after it had fallen by $1.11 to $56.35 per barrel at one point in the day after early gains ahead of the release of weekly US inventory date.

With the August contract expiring at the end of the trading day, the September contract closed at $57.70 per barrel, down 99 cents.

WTI has lost nearly $6 in the past two weeks. Meanwhile in London, Brent crude for September delivery on the International Petroleum Exchange had lost 99 cents at one point in the day before closing down by 71 cents at $56.65.

The US Department of Energy’s weekly inventories report showed that stockpiles of crude oil in the US fell by 900,000 barrels last week, much less of a decline than the expected drop of over 3 million barrels.

The main reason for this was an increase in imports to 10.8 million barrels per day. Gasoline inventories fell by 1.3 million barrels, while stockpiles of distillates grew by 2.3 million barrels, mostly due to gains in heating oil inventories, which are now in the top half of the average range for this time of year.

This increase helped to further ease concerns about low supplies for the fourth quarter of the year. It also sent August distillate futures down 3.61 cents to $1.5950 per gallon, 12 percent below the record high price of $1.8125 per gallon, reached two weeks ago.

Meanwhile, US petroleum product demand has apparently not been affected by high prices. Gasoline consumption is up 2.5 percent from last year’s levels at 9.5 million barrels per day, while distillate demands are 3.6 percent higher at 4 million barrels per day.


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