Oil prices fell on Wednesday, with US crude down more than $1 a barrel on faltering demand for gasoline, and Brent down too as a Libyan oilfield resumed output. US gasoline stockpiles rose 579,000 barrels, the Energy Information Administration reported, surprising analysts polled by Reuters who had expected a 217,000-barrel drop.
"Gasoline demand didn't grow as expected and that disappointment is showing in the negative reaction," said Phil Flynn, analyst at Price Futures Group in Chicago, Illinois. RBOB gasoline futures fell by more than 1 percent to $2.937 per gallon, down 3.5 cents. Libya has restarted the 340,000-barrel-per-day (bpd) El Sharara field after protesters ended a four-month strike, which could double the country's current crude output.
The government has also taken back control of the Ras Lanuf and Es Sider oil ports, ending an almost year-long occupation that reduced Libya's output to less than a quarter of the 1.4 million bpd it was pumping before protests began last summer. Brent crude futures fell by 66 cents to settle at $108.28 a barrel. Brent hit a one-month low of $108.14 during the session, its eighth straight decline, the longest such streak since May 2010.
The August Brent contract was trading at a discount of about 19 cents to the September contract. US crude lost $1.11 to settle at $102.29 after falling as low as $102.00. The US benchmark has fallen in nine straight sessions, its longest such streak since December 2009. As speculators dumped Brent, its premium over US crude touched its narrowest point in almost a month at $5.15, then widened to settle at $5.85.
In June, Brent hit a 9-month high of $115.71 as fund managers and traders rushed to buy Brent when Islamic militants rampaged across Iraq. But many are taking profits now that the violence has had a limited impact on Iraq's crude exports. At the same time, demand for crude has been low from European refiners whose margins have been squeezed by an influx of diesel from the United States, Russia and Asia.
Many refiners have slashed run rates or undertaken extensive maintenance at the height of summer season. "European refiners are having a bit of a tough time. There's a lot of product coming from the (United) States into Europe, which has depressed refining margins, and that's probably one of the reasons why crude is weak," said Christopher Bellew, a broker at Jefferies Bache in London.
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