US crude futures fell 2 percent on Thursday, pressured by reports showing a rise in US jobless claims and a drop in US factory activity, along with disappointment that the European Central Bank did not offer more concrete steps to boost economic growth. Tight North Sea supplies and geopolitical uncertainty lent support after prices fell when the European Central Bank did not offer more concrete steps to boost economic growth.
US September crude fell $1.78, or 2 percent, to settle at $87.13 a barrel, having traded from $86.92 to $89.63. Brent September crude fell 6 cents, or 0.06 percent, to settle at $105.90 a barrel, having swung from $104.97 to $107.30. Reports showing jobless claims rose last week in the United States, though not as much as expected, and an unexpected drop in US factory orders in June, applied pressure to US crude futures.
Trading was volatile and Brent futures received a lift from recent North Sea production problems and the potential threat to oil supply from the turmoil in Syria and Iran's dispute with the West over Tehran's nuclear program. The European Central Bank (ECB) left its benchmark interest rate unchanged and both Brent and US crude turned lower when ECB President Mario Draghi largely repeated previous bank policy at his monthly news conference, leaving open the possibility of future action.
On Wednesday, the US Federal Reserve dashed market hopes by deferring any fresh monetary stimulus for the world's biggest economy, although it kept the door open for more bond buying, also known as quantitative easing (QE). "The North Sea problems and the proximity of the geopolitical threats are supporting Brent, even with the disappointment after the Fed and ECB decisions," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
Brent's premium to US crude jumped above $18 a barrel and September Brent's premium to the October contract stayed firmly above $1 a barrel. US RBOB gasoline futures rallied 5 cents and moved back above their 200-day moving average on Thursday. The front-month September contract's premium to October was above 23 cents a gallon.
US gasoline inventories fell sharply last week, the government's weekly report on Wednesday last week, and Chicago cash gasoline differentials rose to their highest in a year on Wednesday, on refinery problems and a shut crude oil pipeline in the region. The threat of tropical weather in the Atlantic was another factor mentioned by analysts and traders as providing support to front-month gasoline.
Maintenance work in the British sector of the North Sea will cut crude oil production in September. The Brent contract is based on four North Sea crude oils - Brent, Forties, Oseberg and Ekofisk - and export programs for September, due to be revealed next week, were expected to show a sharp drop in output of Forties.
Seaborne oil exports from Opec, excluding Angola and Ecuador, will fall by 120,000 barrels per day (bpd) in the four weeks to Aug. 18, according to the latest weekly estimate from UK consultancy Oil Movements. The US Congress passed a new package of sanctions against Iran on Wednesday that aims to punish banks, insurance companies and shippers that help Tehran sell its oil.
The European Union's embargo on purchases of Iranian crude took effect in July as the dispute between the West and Iran over Tehran's nuclear program drags on. Iraq's semi-autonomous region of Kurdistan plans to halt oil exports on Aug. 31 if the central government does not make all outstanding payments, the region's minister of natural resources said.