US gasoline stocks dropped 3.26 million barrels to 238.2 million barrels last week, according to the US Energy Information Administration (EIA), against expectations for a draw of around 200,000 barrels.
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Brent for October settlement rose 77 cents, or 1.8%, to $42.57/bbl on the London-based ICE Futures Europe exchange. Brent crude, the more widely used worldwide benchmark, also dipped below $42 a barrel, having passed the $54 mark at the beginning of June.
USA oil futures moved back lower on Friday, after two consecutive sessions of gains as concerns over a global supply glut continued to weigh.
On the New York Mercantile Exchange, a barrel of West Texas Intermediate benchmark crude for September delivery fell 13 United States cents to close at US$41.80.
At present, the market is focusing more on gasoline inventories instead of crude stockpiles amid the sentiment that the glut in gasoline could lead back to a fall in crude oil prices.
“We are not surprised to see spot prices rebounding on the gasoline draw, but I think this will be short-lived”, Tariq Zahir, a trader in crude oil spreads at Tyche Capital Advisors in NY, told Reuters last night.
Short positions in the USA benchmark rose 28%, with an increase of 38,897 futures and options combined, in the week ended July 26, according to the CFTC.
“In 2012-2014 Brent averaged $106 per barrel. and refining margins $3 per barrel”. Indeed, data released on Wednesday showed that U.S. production excluding Alaska, which has very little shale oil reserves, did not fall for the first time since early March as production from new wells offset declines in output from older ones.
Oil prices rose markedly on Wednesday after several days of losses while weekly figures from the US Energy Department painted a mixed picture.
After falling to a 12-year low of sub-USD 30 a barrel at the start of the year, prices regained ground on supply disruptions such as the Canada’s wildfires in its oil producing regions and rebels bombing supply lines in Nigeria.
Few believe oil will revisit the 12-year lows of $26 to $27 a barrel seen in the first quarter, but many are zeroing in on $35 a barrel or lower for US crude. Baker Hughes Inc. reports drill rig data Friday, which will signal if US producers are continuing to boost activity. Nationwide inventories expanded by 1.4 million barrels to 522.5 million, keeping supplies more than 100 million barrels above the five-year average.
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“I can give you reasons why I don’t think oil prices are going to collapse…but the momentum is very weak”, he said.
