Crude oil futures fell Wednesday as traders looked past a sharp stockpile decline in U.S. weekly oil inventory to data to focus on rising stocks of fuel products.
After trading at low as $88.83 U.S. a barrel before the data was released, light, sweet crude oil for October delivery on the New York Mercantile Exchange recently traded at $88.40 U.S. a barrel, down 2% from Tuesday's close.
U.S. commercial oil stockpiles fell 6.7 million barrels in the week ended Sept. 9, a larger drop than the decline of 3.1 million barrels forecast by analysts in a Dow Jones Newswires survey. But refinery production also fell, with utilization dropping two percentage points to 89% of capacity.
Analysts said it was difficult to glean much from the oil-stockpiles data on U.S. supply and demand, as weather disruptions appear to have caused some of the production cuts and inventory declines.
Still, traders looked to the larger-than-forecast increases in gasoline and distillate stocks, and a drop in demand across most finished petroleum products. Gasoline stockpiles rose by 1.9 million barrels and stocks of distillate, which include heating oil and diesel, rose by 1.7 million barrels. Analysts had expected a 500,000-barrel decline in gasoline stocks and a 500,000-barrel increase in distillates.
The data pushed U.S. crude further below the $90 U.S.-a-barrel mark after it settled above that level Tuesday for the first time since Aug. 3. North Sea Brent was down slightly, with October futures recently down 63 cents at $111.27 U.S. a barrel on ICE Futures Europe.
The nervous pause comes as the leaders of Germany and France said they would hold a conference call later in the day with Greece's prime minister over that nation's debt crisis. Worries over the impact of a potential Greek default on the euro-zone economies and the global economy escalated, as Moody's Investors Service cut the credit ratings of two French banks, Societe Generale and Credit Agricole, because of their exposure to Greek debt.
For all markets, that came against the backdrop of the International Energy Agency's move Tuesday to lower its global oil demand projections for this year and next on a weaker economic outlook.
Retail gasoline prices, which were about one-third higher than a year ago in the peak summer driving season, slashed demand, forcing refiners to boost exports to work off high inventories. U.S. gasoline demand fell 2.4% last week to the lowest level since February and the weakest driving-season level since 2005, according to a SpendingPulse report released Tuesday by MasterCard Advisors LLC.
Reformulated gasoline blendstock futures for October were 5.24 cents lower at $2.6900 U.S. a gallon. Heating oil for October delivery was 2.70 cents lower at $2.9091 U.S. a gallon.
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