Oil prices fell on Wednesday as concerns about the health of the US economy overcame bullish draws in crude and fuel stocks of the world's top consumer. US crude futures settled down 27 cents to $72.15 a barrel, while London's Brent crude settled 81 cents lower at $70.99 a barrel.
Worries about a possible slowing in the US economy, the debt market squeeze and falling stock prices have sent US oil prices tumbling from a record high of $78.77 a barrel struck last Wednesday. "Commodity markets, for the most part, still seem to be transfixed by the growth picture in the US" said MF Global Energy.
Prices fell despite a report from the Energy Information Administration showing a 1.7 million barrel draw in US gasoline inventories as refinery utilisation rates were down 2.3 percentage points. Refineries have struggled to keep up with peak US summer gasoline demand due to unplanned outages. Crude stocks fell 4.1 million barrels, exceeding analyst calls for a draw of 2.7 million barrels, as imports slowed.
"We're down more than 10 million barrels in crude in the past two weeks and that's a lot of oil lost. Obviously this is a shock to the system," said Phil Flynn of Alaron Trading.
"It shows you that refineries are still having problems and they can't seem to get to the normal seasonal run levels." US Energy Secretary Sam Bodman on Wednesday said he planned to speak with Opec members ahead of the producer group's next meeting on September 11 to encourage them to increase crude output. Some analysts and consumer nations are concerned supplies could be stretched to keep pace with demand growth later this year unless the cartel raises supplies.
But Venezuelan Oil Minister Rafael Ramirez echoed comments from other Opec members that markets remain well supplied. "There is enough oil in the market," Rafael Ramirez told Reuters on Wednesday while visiting Uruguay. "When we have the Opec meeting in September we will be able to make a more exact determination of the market situation."
US stocks rose on Wednesday, boosted by technology shares which sent the Nasdaq composite index higher. Financial companies also shone as investors bought beaten-down shares and took comfort in the Federal Reserve's view that the economy was likely to keep growing despite turmoil in credit markets.
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