Crude Oil Drops on Concern Fuel Supply Will Rise

Crude oil dropped in New York for the second day on concerns that US gasoline stockpiles may rise because of weak demand during the recession, Bloomberg reported.

Crude oil for July 2009 delivery dropped as much as $0.50, or 0.7%, to $69.05 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract was traded at $69.44 at 10.33am Singapore time.

The contract, which expired on 22 June, ended at $69.55 on 19 June – the lowest settlement since 8 June.

On 19 June the oil extended a 2.6% loss after gains in refinery production amid lower consumption pulled motor fuel futures down by 5.2%.

The Energy Department said that US gasoline inventories rose to a larger-than-expected 3.39 million barrels in the week ended 12 June.

The August 2009 oil delivery, the more actively traded contract, dropped as much as $0.56, or 0.8%, to $69.46 a barrel on 22 June. On 19 June it fell 2.6% to $70.02.

“If we should stay below $70 for the August contract that should be a bearish sign,” said Astmax’s Emori. “The trading for today and tomorrow will be very important in setting the direction for the market.”

Stockpile increase

US gasoline inventories in the last week increased to 205 million barrels – the highest increase since January.

The Energy Department said that the motor fuel demand averaged 9.26 million barrels a day for the four weeks ended 12 June. That’s down 0.3% from the previous year.

Daily fuel demand in the four weeks ended 12 June was down 6% from a year earlier, the Energy Department said.

Brent crude for August settlement dropped as much as $0.34, or 0.5%, to $68.85 a barrel on London’s ICE Futures Europe exchange. It was traded at $69.17 a barrel at 10.32am Singapore time.