Oil futures fell Thursday and prices for the US and global crude oil benchmarks were on track to mark their lowest settlements since July as concerns remain about the outlook for demand.
The Energy Information Administration on Wednesday reported a sharp drop in US crude oil inventories of 9.4 million barrels per week and a drop in gasoline inventories of 4.3 million barrels. However, the data also showed "a demand spike and a drop in inventories attributed to a one-time drop in Hurricane Laura," Phil Flynn, senior market analyst at The Price Futures Group, said in a daily report.
In the past four weeks, the amount of gasoline product shipped, an indicator of demand, fell 8.9% over the same period last year. Distillate fuels, which include heating oil, fell 5.1% and jet fuel products fell 47.1%, the EIA reported.
Meanwhile, oil production in the Gulf of Mexico region has recovered significantly since the hurricane landed on August 27th. The Bureau of Safety and Environment on Wednesday estimated that 19.9% of current oil production in the Gulf of Mexico has ceased. Laura bounced back from approximately 84% when Laura hit the Gulf Coast.
West Texas Intermediate Crude Oil for October delivery
on the New York Mercantile Exchange fell 94 cents, or 2.3%, to trade at $ 40.57 a barrel. November Brent
The global benchmark at ICE Futures Europe fell $ 1.07, or 2.4%, to $ 43.36 a barrel. Settlements based on the current level for both benchmarks would represent the lowest level for front month contracts since the end of July.
Traders searched the latest US economic data for clues about the outlook for energy demand. On Thursday that data was mixed, with weekly jobless claims falling and the trade deficit rising in July. A closely tracked index of non-manufacturing companies – retailers, banks, airlines, healthcare providers, and the like – fell in August.
A recovery in the US dollar has also limited the upward trend in commodities. Oil had previously found support as the ICE US dollar index
A measure for the US currency versus a basket of six major competitors fell to a more than two-year low earlier in the week, but is trading around 0.5% lower for the week so far.
“The macro picture has started to send more mixed signals to the oil market, with equity market strength becoming more concentrated in a few indices / sectors, government bond rates tending to be lower and the US dollar index picking up again after the EUR / The USD exchange rate hit the USD 1.20 level two days ago, ”JBC Energy analysts wrote in a note.
A stronger dollar can put pressure on commodity prices, making them more expensive for users of other currencies.
The weakness in oil prices was also attributed to a report by Bloomberg that Iraq could seek a two-month extension of its deadline for implementing additional production cuts under the OPEC + treaty. Iraq and other countries that overproduced their quotas earlier this summer will have to make deeper cuts to make up for this.
However, Iraq later denied reports that it wanted the cuts to be cut, "saying instead it was committed to the cuts, Flynn said.
On Nymex, October Gasoline
fell 1.6% to $ 1.1834 a gallon while in October heating oil
decreased 3.7% to $ 1.1449 a gallon.
October natural gas
increased 2.3% to $ 2.545 per million thermal units.
The US Energy Information Bureau reported Thursday that domestic natural gas shipments rose 35 billion cubic feet for the week ending August 28. This was broadly in line with the 34 billion cubic feet increase projected by analysts surveyed by S&P Global Platts.