By July 20, 2016 Read More →

Oil prices up after ninth weekly U.S. crude drawdown

oil prices

One analyst argued builds in gasoline stocks suggest the recent rally in oil prices is unsustainable. Shell photo.

Oil prices up, gasoline futures hit four-month low

By Barani Krishnan

NEW YORK, July 20 (Reuters) – Oil prices rose 1 percent on Wednesday, lifting U.S. crude from two-month lows, after the U.S. government reported a ninth straight week of crude inventory draws, easing some concerns in a market worried about a fuel glut.

U.S. gasoline prices, however, hit four-month lows after the data from the U.S. Energy Information Administration also showed a surprise build in supplies of the motor fuel despite forecasts of American drivers hitting the road in record numbers this summer.

The EIA said crude inventories fell 2.3 million barrels in the week to July 15, close to analysts’ expectations for a decrease of 2.1 million barrels.

“While in line with expectations, the drawdown is large enough to provide support, and refiner demand for crude remains elevated,” said John Kilduff, partner at New York energy hedge fund Again Capital.

Gasoline stocks rose 911,000 barrels, compared with forecasts for stocks to remain unchanged.

Stocks of the motor fuel rose in spite of gasoline output slipping 168,000 barrels per day even as refinery crude runs increased 319,000 b/d, the EIA data showed.

“We continue to see these builds in gasoline which suggest the market is fundamentally not sound to sustain a rally,” said Tariq Zahir, a trader in WTI crude spreads at Tyche Capital Advisors in New York.

Brent crude futures were up 60 cents, or 1.3 percent, at $47.26 a barrel by 12:21 p.m. EDT (1621 GMT). It fell 76 cents earlier to an intraday low of $45.90.

West Texas Intermediate (WTI) crude’s front-month August contract futures rose 40 cents, or 1 percent, to $45.05 a barrel.

WTI’s August contract, which expires on Wednesday, earlier hit a two-month low of $43.69, below the 100-day moving average of $43.85 for the benchmark.

U.S. gasoline futures were down 0.4 percent at $1.3698 per gallon after hitting an early March low of $1.3381.

Oil prices are up nearly 75 percent since hitting 12-year lows of around $27 for Brent and about $26 for WTI in the first quarter. The rally has stalled since the two benchmarks breached the $50 a barrel mark in May as worries grew that higher prices will add to production.

Prices had been depressed lately by a glut in motor fuels despite the U.S. peak summer driving season.

(Additional reporting by Karolin Schaps in LONDON; Editing by Jeffrey Hodgson and Marguerita Choy)

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