Brent Oil Drifts Below $102 on U.S. Inventories
Oil fell on Thursday, with a surprise rate cut from the European Central Bank boosting the dollar and hitting commodities priced in the U.S. currency.
Losses were limited by a drop in crude oil inventories in the United States, with data from the Energy Information Administration (EIA) showing they fell by 905,000 barrels last week. U.S. gasoline stocks dropped by 3.2 million barrels.
“The report is mildly supportive, due mostly to the large gasoline inventory drawdown,” said John Kilduff, a partner at Again Capital LLC in New York.
“The improving economic conditions and lower retail prices for gasoline are having an effect. Gasoline demand remains strong as a result.”
Brent crude for October delivery fell nearly $1 to trade under $102 a barrel. U.S. crude slid by $1.09 to settle at $94.45 a barrel, after settling $2.66 higher on Wednesday.
The EIA data showed that crude stocks at Cushing, delivery point of the U.S. crude contract, were down 385,000 barrels.
U.S. crude underperformed Brent on Thursday as East Coast refiners are finding it harder to take crude from the Bakken shale area due to railway maintenance, making the oil more likely to head to the Cushing, Oklahoma pricing hub. Additionally a major pipeline connecting Cushing to refiners on the Gulf Coast has been shut since Aug. 31, further backing up stocks at the key storage sight.
Investors will be watching nonfarm payrolls data on Friday for further clues on the outlook for the U.S. economy.
In Brent, Thursday’s focus was on Europe as the ECB cut interest rates to a record low, unexpectedly bringing borrowing costs close to zero to lift inflation from rock-bottom levels and support the stagnating euro zone economy. The move prompted the euro to fall to its lowest in more than a year against the dollar.
Source: CNBC
