Crude oil falls

Crude oil prices fell on Wednesday as the eurozone debt crisis escalated and reinforced concerns about slowing economic growth, while US gasoline futures jumped more than 3 percent due to depressed inventories and supply uncertainty. The continuing dispute between the West and Iran over Tehran's nuclear programme limited losses for Brent crude, which is more sensitive to supply disruptions in the Middle East and Africa.
Europe's debt problems deepened as Spain's economy slowed further and anti-austerity demonstrators and police clashed in Athens and Madrid. The euro slumped to a two-week low against the dollar and the dollar index strengthened, pressuring dollar-denominated industrial commodities like oil and copper. "It is 'risk off' today," said Olivier Jakob, energy analyst at Petromatrix in Zug, Switzerland. "The Greek strike and Spanish demonstrations are getting a lot of coverage."
Developments in Europe overshadowed any bullish sentiment generated by government data showing US crude inventories fell 2.45 million barrels last week, against analyst expectations that they would be higher. Brent November crude fell 41 cents to settle at $110.04 a barrel, after stumbling to $108.45. Brent hit a six-week low of $107.10 last Thursday, but remained on track this week to post a 12 percent gain for the third quarter. US November crude tumbled $1.39 to settle at $89.98 a barrel, below its 100-day moving average of $90.27 and the lowest settlement and first under $90 since August 2. Wednesday's session low of $88.95 was its lowest since prices hit $87.23 intraday on August 3.
US crude was on pace to post a nearly 6 percent gain for the third quarter. US RBOB gasoline futures jumped 11.40 cents, or 3.8 percent. Gasoline pushed back above $3 a gallon, even as the rest of the oil complex was pressured. Gasoline got a lift from a report of an explosion at Irving Oil Ltd's New Brunswick, Canada, refinery, though the company later said the blast was in a tank and that normal operations had resumed at the refinery. Seasonal maintenance at refineries on both sides of the Atlantic ahead of Northern Hemisphere winter fuel demand added support to futures prices.
US gasoline inventories fell 481,000 barrels against expectations they would be up slightly, putting total US stocks and East Coast inventories at their lowest since October 2008, according to data from the US Energy Information Administration. "We've seen major moves on the RB (gasoline) market so far and the continuing draws on inventory are giving us not much hope with maintenance season ahead," said Carl Larry, president at Oil Outlooks LLC.
The East Coast region includes the New York Harbor, delivery point for the US gasoline futures contract traded on the New York Mercantile Exchange. US heating oil, the benchmark distillate futures contract, edged 0.06 percent lower, as front-month October refined products contracts headed for expiration on Friday. US distillate demand in the four weeks to September 21 was down 8.7 percent versus the year-ago period, the EIA said. Iran appears to be making headway in building a research reactor that could yield potential nuclear weapon material, according to experts and diplomats. Iranian President Mahmoud Ahmadinejad said on Wednesday told reporters at the United Nations that Tehran is capable of neutralising all efforts to sabotage its nuclear facilities and repeated that Iran is ready for dialogue with the United States.