Crude oil prices have dropped to their lowest level since May of this year after a surprise increase in U.S. gasoline inventories signaled fuel demand is softening.
West Texas Intermediate crude is down 1.7% to $65.46 U.S. a barrel, the fifth straight daily decline. Futures briefly dipped below $65 U.S. for the first time since May in after-hours trading.
Domestic U.S. gasoline inventories rose by 696,000 barrels, the first increase in more than a month, according to data released by the Energy Information Administration (EIA). Meanwhile, crude stockpiles declined by a larger-than-forecast 3.23 million barrels.
The EIA report followed an industry-funded American Petroleum Institute tally that saw a 1.16-million decline in crude oil inventories with supplies at the Cushing, Oklahoma, hub dropping by 1.74 million barrels. The group also pegged the drop in gasoline stockpiles at almost two million.
Crude oil prices surged during the first half of this year as vaccination rollouts increased confidence about the pace of the global economic recovery. But the rally has been knocked off course in recent weeks amid signals in the U.S. and China that the spread of COVID-19’s Delta variant may be hurting energy demand.
West Texas Intermediate crude oil for September delivery fell $1.13 U.S. to settle at $65.46 U.S. a barrel. Brent crude oil for October delivery fell by $0.80 U.S. to $68.23 U.S.
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