Oil at six-month low despite drop in gasoline supplies

New York: Oil prices in New York fell again Wednesday on worries about lower demand, even after an inventory report showed a surprising drop in US gasoline supplies. US benchmark West Texas Intermediate for September delivery dropped 46 cents to $96.92 a barrel on the New York Mercantile Exchange, the lowest closing price since February 3.

European benchmark Brent oil for September delivery dipped two cents to $104.59 a barrel in London. Analysts said they were surprised WTI finished lower after the US Energy Information Administration's weekly inventory report showed lower oil and petroleum product inventories. The report showed a 4.4 million barrel drop in gasoline stocks and a 1.8 million barrel decline in diesel inventories. Both products had been expected to show increases.

Andy Lebow, a senior vice president at Jefferies Bache, said the gasoline figure in particular was ‘bullish’. But traders continued to be preoccupied by concerns about lower gasoline use once the summer driving season ends in a few weeks, he said. US oil prices have fallen six of the last seven days. "Crude runs are going to continue to decline," Lebow said. ‘Part of it is seasonal’. Lebow noted the report showed a decline in demand in crude supplies to oil refineries from 16.6 million barrels a day to 16.4 million.

The data also showed lower refinery utilization, another sign the oil business is beginning to shift operations in anticipation of lower gasoline use.