Oil prices dropped by more than $1 a barrel Wednesday (Aug. 22) after U.S. government data showed rising supplies of gasoline and other fuels as refiners cranked up their output.
The Associated Press reported that analysts said the falling prices also reflected concerns about the economy, which were fueled by an industry report showing sales of previously owned homes plunged in July.
Light sweet crude for October delivery fell $1.65 to $71.45 a barrel on the New York Mercantile Exchange, where gasoline futures declined by more than 10 cents to $1.835 a gallon.
In its weekly petroleum supply report, the Department of Energy’s Energy Information Administration said U.S. inventories of gasoline grew by 400,000 barrels last week to 205.8 million barrels, or 2.8% more than a year ago.
Fimat USA analyst John Kilduff said the build was significant because it came “in the face of some pretty heavy demand.” The EIA report showed that daily gasoline demand averaged 9.6 million barrels over the past four weeks, or 1.7% more than a year ago.
Crude-oil inventories dipped by 600,000 barrels to 330.4 million barrels, or 5% higher than last year, as U.S. refiners ran their plants at 92.8% of capacity, on average, according to the government report.
“This is allowing the gasoline market to wring out a lot of the supply jitters,” Kilduff said.
Pump prices fell by more than 7 cents last week to average $2.92 a gallon nationwide, and the end of the summer driving season usually brings even lower prices. But Kilduff cautioned that risks remain.
The market is on guard for any hurricanes that could strike Gulf of Mexico production and refining facilities, and it remains sensitive to the face-off between the West and Iran, the No. 2 producer in the Organization of Petroleum Exporting Countries.