Oil declined for the fifth time in six days after U.S. gasoline demand tumbled to the lowest level in 10 years and inventories rose.
Crude fell after the Energy Department said gasoline demand dropped to 8 million barrels a day last week, the lowest level since September 2001. Gasoline stockpiles climbed 3.72 million barrels to 227.5 million, a 10-month high.
“The product data was not supportive, especially gasoline,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. “Gasoline data certainly is tempering the bullishness in the early going when crude was trying to rally.”
Crude for February delivery slid 20 cents, or 0.2 percent, to settle at $100.39 a barrel on the New York Mercantile Exchange. Oil has gained 17 percent in the past three months.
Brent oil for March settlement rose 89 cents, or 0.8 percent, to settle at $111.55 a barrel on the London-based ICE Futures Europe exchange.
The gain in gasoline inventories exceeded the 2.35 million median estimate of 12 analysts in a Bloomberg News survey. Demand declined for the third week in a row.
“The build in gasoline inventories may be short-lived, but it is bearish for crude,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. “Gasoline demand is down and the market is still playing defense.”
Crude Stockpiles Drop
Crude stockpiles fell 3.44 million barrels to 331.2 million. Analysts expected a gain of 3 million. Yesterday the American Petroleum Institute reported stockpiles dropped 4.81 million barrels to 330.1 million.
“We had a draw in crude but a big increase in gasoline, so the numbers are kind of mixed,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “The drop in crude inventories wasn’t as bullish as yesterday’s API numbers and the market is a bit disappointed.”
Inventories of distillate fuels, which include heating oil and diesel, grew 438,000 barrels to 148 million. Analysts expected a gain of 1.38 million.
Stockpiles at Cushing (DOESCROK), Oklahoma, the delivery point for Nymex oil futures, declined for a fifth week, down 2.9 percent to 28.3 million barrels. That’s the lowest level in more than two years.
Total petroleum demand increased for the first time in four weeks, up 0.5 percent to 17.9 million barrels a day.
Early Advance
Oil rose as much as 1.5 percent in early trading after the Labor Department said weekly jobless claims plunged by 50,000 to 352,000 in the week ended Jan. 14, the lowest level since April 2008.
The claims were lower than the median forecast of 384,000 in a Bloomberg News survey. The drop in the claims was the biggest since September 2005.
“The U.S. economy continues to look better,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market seems to have a support at $100. As long as we don’t have a European recession, the market is poised for another run past $104.”
The International Energy Agency sees no urgency to release oil stockpiles amid threats from Iran to disrupt traffic in the Strait of Hormuz, Fatih Birol, the group’s chief economist, said in an interview today. The strait is the passageway for almost one-fifth of the world’s oil trade, according to the Energy Department.
Iran’s ambassador to the United Nations, Mohammad Khazaee, said yesterday that closing the strait is an option if his country’s security is endangered. European Union foreign ministers are scheduled to meet Jan. 23 to discuss a ban on purchases of Iranian crude, which the IEA said may happen within six months.
“Geopolitical tensions always put some kind of floor on oil prices,” said Phil Streible, a Chicago-based commodities broker at RJO Futures. “Eventually we are probably going to see that embargo take place.”
Oil volume in electronic trading on the Nymex was 555,999 contracts as of 2:41 p.m. in New York. Volume totaled 706,898 yesterday, 17 percent above the three-month average. Open interest was 1.37 million contracts.
