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Crude oil futures fell Wednesday (Nov. 2) after the U.S. government released data that showed rising supplies of oil and gasoline, but hinted that a recent decline in gasoline demand was tapering off.
According to an Associated Press report, light sweet crude for December delivery on the New York Mercantile Exchange fell 70 cents to $59.15 a barrel in afternoon trading. Heating oil futures fell 4 cents to $1.765 a gallon, while gasoline futures dropped 3.46 cents to $1.569 per gallon.
In its weekly petroleum supply report, the federal Energy Information Administration (EIA) said Wednesday that U.S. crude inventories rose by 2.7 million barrels to 319.1 million barrels, or 12% above year ago levels. Gasoline inventories grew by 1 million barrels to 196.9 million barrels, or 3% below year ago levels.
The EIA data also showed that average daily gasoline demand over the past four weeks was 1.7% below year ago levels. However, the gap is narrowing because consumption has been rising week to week since the start of October.
“We’re moving back into last year’s range” for demand, said broker Andrew Lebow at Man Financial Inc. in New York. But Lebow said he considered the government report, overall, to be bearish for energy prices.
Oil prices fell below $60 a barrel for the first time in more than three months on Monday due to seasonally warm weather in parts of the U.S., dampening demand for home heating fuels such as natural gas and heating oil. Crude futures are about 15% below their Aug. 30 peak of $70.85.
Gasoline futures are sharply below their late August peak due to the recovery of refinery operations along the Gulf coast in the aftermath of hurricanes Katrina and Rita. Signs of slightly lower demand for gasoline have also had an impact on the market. Last week, the average retail price for a gallon of gasoline nationwide was $2.48 per gallon, or 12 cents higher than the year before.
“The post-hurricane price effects really hit a nerve with consumers and it’s affected market psychology as well,” Jim Burkhard at Cambridge Energy Research Associates said. “But we’re not likely to see the same degree of demand destruction in the next few months.”