U.S. oil futures settled lower Wednesday after the government reported a weekly decrease in domestic crude supplies, the first in three weeks, but smaller than the market expected.
Concerns over energy demand also continued to pressure prices.
Looking at the inventory data from a trend standpoint, “it appears the stretch of steep draws in crude supply, which were offering fundamental price support to the oil market earlier in the summer, have abruptly ended according to the last three EIA reports, as stockpiles have actually risen modestly since late July,” said Tyler Richey, co-editor at Sevens Report Research.
“Demand concerns linked to a potential global economic slowdown remain the No. 1 headwind for oil right now,” he added.
West Texas Intermediate crude for October delivery CLV19, -0.91% fell by 45 cents, or 0.8%, to settle at $55.68 a barrel on the New York Mercantile Exchange, following gains in each of the last three trading sessions. It was at $56.77 shortly before the supply data. The October contract for global benchmark Brent crude BRNV19, +0.85%, however, rose 27 cents, or 0.5%, to $60.30 a barrel on ICE Futures Europe. On Tuesday, Brent finished above $60 for the first time in a week.
The Energy Information Administration on Wednesday reported that U.S. crude supplies fell by 2.7 million barrels for the week ended Aug. 16. That followed increases in each of the previous two weeks. Analysts polled by S&P Global Platts, on average, expected a decline of 3.1 million barrels, while the American Petroleum Institute on Tuesday reported a 3.5 million-barrel decrease.
The EIA data also showed that inventories of gasoline edged up by 300,000 barrels, while distillate stockpiles rose by 2.6 million barrels last week. The S&P Global Platts survey had shown expectations for a supply decreases of 1.6 million barrels for gasoline and 200,000 barrels for distillates.
On Nymex, September gasoline RBU19, +0.52% rose 1.3 cents, or 0.8%, to $1.6938 a gallon, while September heating oil HOU19, -0.04% added nearly half a cent, or 0.2%, to $1.8573 a gallon.
The latest petroleum-product supply increases suggest that stockpiles are “currently outpacing demand,” said Richey.
“On a longer time frame, oil stockpiles are up 7.20% from where they were in the corresponding week in 2018, while gasoline inventories are effectively unchanged from last years levels and distillate supply is up 5.57% over the same time frame,” he said. “Those figures and trends in the supply data point to a bearish dynamic of an energy market that is oversupplied.”
Also on Nymex, September natural gas NGU19, -2.03% fell 4.8 cents, or 2.2%, to settle at $2.17 per million British thermal units. A report from the EIA due Thursday is expected to show a 61-billion-cubic-foot climb in last week’s U.S. natural-gas inventories, according to analysts polled by S&P Global Platts.
Oil prices saw little reaction to the Wednesday release of minutes from the Federal Open Market Committee’s July meeting. Fed officials shied away from saying how many more easing steps they might be willing to support this year. Some officials said the Fed had to remain “flexible” and focused on the economic data given the risks weighing on the economy.