Somewhere else, on the ICE Futures Exchange in London, delivery of Brent oil for October edged down 18 cents, or 0.42 percent, to $42.92 a barrel, after increasing $1.30, or 3.11 percent on Wednesday.
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Gasoline inventories dropped 3.26 MMbbl last week, the Energy Information Administration report showed.
Last week, the EIA reported an increase in petroleum stocks of 1.7 million barrels, which weighed on crude prices significantly, especially coupled with the build in gasoline stockpiles, which added fuel to fears that market fundamentals were far from rebalanced. We believe that this data had a negative impact on the crude oil prices along with the uncertainty about the hike of the interest rate in the US.
Despite the price gains, traders said that overall market conditions remained weak, with a production overhang in both crude and refined products weighing on markets.
Crude oil futures traded at a new four-month low below $40 United States a barrel Tuesday amid continuing oversupply worries. Despite some supply disruption in Nigeria, Kuwait, Venezuela and Canada, there were no physical shortages of product amid the oil rally between February and June. But it noted that oil’s recent decline came amid supportive factors like the dollar weakening.DXY and refining margins for petrol 1RBc1-CLc1 widening.
Oil fell during afternoon trade in Asia Wednesday, with USA crude hovering near three-month lows as traders awaited data that will give hints of demand in the world’s top consumer. On Tuesday, it settled below $US40 a barrel for the first time since April.
On the New York Mercantile Exchange, a barrel of oil for September delivery rose $1.10 to $41.93.
“Weaker crude throughput at refineries will lower crude demand”, BMI Research said.
Gasoline inventories however were down 1.4 percent at 238.2 million barrels, but were still up 9.9 percent year-on-year. “Signs of rising production from major producers bring bearish signals to the long term market”, said EY Services head of oil and gas Sanjeev Gupta.
“The problem has been that the market priced in a full rebalancing too quickly and discounted the scale of the inventory overhang, which has left many disappointed”.
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For the second consecutive day USA crude prices have dropped below $40 a barrel on growing concerns over global oversupply.
