The selloff in crude-oil futures gained steam at mid-morning Wednesday after U.S. weekly oil data showed a sharp drop in demand and a larger-than-expected rise in oil stockpiles. Demand for gasoline–the most widely used petroleum product in the world’s biggest oil consumer, fell to a near nine-year low last week, the Energy Information Administration said. Demand of 8.179 million barrels a day was down 4.4% from a week earlier and 7.3% below a year earlier. The drop, in the week which included the New Year’s holiday, put demand at the lowest level since Feb. 7, 2003.
The severe weakness in gasoline, along with an 8.1% drop in distillate use (diesel/heating oil) to a one-month low, cut total oil demand to a 32-month low of 17.811 million barrels a day. Light, sweet crude oil for February delivery on the New York Mercantile Exchange was 1.1%, or $1.14, lower, at $101.10 a barrel, after hitting a low of $100.55 a barrel. ICE North Sea Brent crude for February was 56 cents lower, at $112.72 a barrel.
Crude-oil stocks gained nearly five million barrels, far more than the expected 1.1-million-barrel rise, led by a 883,000-barrels-a-day jump in imports, to 9.907 million barrels a day, the most since July 2010. At 334.6 million barrels, crude stocks are 1.5 million barrels above their level a year ago. That is the first year-to-year stock rise since July 2011. As recently as the end of November, stocks were nearly 25 million barrels below a year earlier. Crude stocks are now 5.4% above the five-year average, the biggest surplus since mid-September 2011.
Gasoline stocks rose 3.61 million barrels, compared with an expected 2.1-million-barrel rise, while distillate stocks nearly four million barrels, more than double the expected 1.9-million-barrel rise.
Reformulated gasoline blendstock futures for February delivery fell 2.39 cents to $2.7489 a gallon, while February heating-oil futures were 0.34 cent lower, at $3.0980 a gallon.
EasyForexNews Research Team