Oil Falls as Refiners Slow Operations and Supplies Decline

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Release: 2014-09-04 14:49

West Texas Intermediate crude fell after a government report showed that U.S. refineries reduced operating rates as the peak driving season came to an end.

Refineries operated at 93.3 percent of their capacity last week, down 0.2 percentage point from Aug. 22, according to the Energy Information Administration. Refiners schedule maintenance for September and October as they transition to winter from summer fuels. The euro tumbled against the dollar after the European Central Bank cut rates and announced stimulus.

“The market is dominated by the fundamentals,” Mike Wittner, the head of oil market research at Societe Generale SA in New York, said by phone. “Refiners in the U.S. are going into maintenance, which is going to reduce demand for crude here and weigh on WTI. We could see WTI fall relative to Brent in the months ahead because of U.S. maintenance.”

WTI for October delivery dropped $1.09, or 1.1 percent, to close at $94.45 a barrel on the New York Mercantile Exchange. Futures settled at $92.88 on Sept. 2, the lowest settlement since Jan. 14. Prices have decreased 4 percent this year.

Brent for October settlement slipped 94 cents, or 0.9 percent, to end the session at $101.83 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $7.38 premium to WTI, up from $7.23 yesterday.

Crude supplies declined 905,000 barrels to 359.6 million in the week ended Aug. 29, the report showed. Inventories were projected to fall by 1 million barrels, according to the median of 10 analysts surveyed by Bloomberg.

Supplies of crude at Cushing, Oklahoma, the delivery point for WTI traded in New York, fell by 385,000 barrels to 20.3 million last week, data from the EIA showed. It was the first decline in five weeks.

Gasoline inventories slid 2.32 million barrels to 210 million, the lowest level this year, according to the EIA, the Energy Department’s statistical arm. Stockpiles of distillate fuel, a category that includes diesel and heating oil, rose by 605,000 barrels to 123.4 million.

Consumption of gasoline rose 4.2 percent to 9.48 million barrels a day, the highest level since July 2010, according to the EIA.

Source: Bloomberg

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